General Security Agreement Template for New Zealand

A General Security Agreement (GSA) is one of the most important documents in New Zealand commercial lending, providing lenders with comprehensive security over a borrower's assets. Under the Personal Property Securities Act 1999, this agreement creates a security interest that covers all present and future personal property of the borrower, giving lenders priority over unsecured creditors in the event of default.

When do you need this document?

You need a GSA when establishing any significant lending relationship where security is required. Banks and financial institutions routinely use GSAs for business loans, equipment financing, and working capital facilities. Private lenders often require GSAs when lending to small businesses or individuals for substantial amounts. The document is essential when you're providing a line of credit or revolving facility, as it automatically covers future advances without requiring new security documents. Companies seeking to secure their obligations under guarantees or performance bonds also rely on GSAs to provide the necessary security backing.

Key legal considerations

The grant clause is the heart of your GSA, and it must clearly describe the security interest being created over specific types of property. Your agreement should include comprehensive definitions that align with PPSA terminology, covering inventory, equipment, accounts receivable, and intellectual property. Representations and warranties protect the secured party by ensuring the grantor has clear title to the secured property and authority to grant the security interest. Default provisions must be carefully drafted to specify events that trigger enforcement rights, including payment defaults, breach of covenants, and insolvency events. Enforcement clauses should outline the secured party's rights upon default, including the ability to take possession, sell the secured property, and appoint receivers.

Legal requirements in New Zealand

Under the Personal Property Securities Act 1999, your GSA must be registered on the Personal Property Securities Register (PPSR) within specified timeframes to perfect the security interest and establish priority. Registration must occur within 15 working days for purchase money security interests to maintain super priority status. The agreement must comply with the Credit Contracts and Consumer Finance Act 2003 if it involves consumer lending, requiring specific disclosure statements and cooling-off periods. For company borrowers, you must also consider the Companies Act 1993 requirements for registering charges with the Companies Office. The Contract and Commercial Law Act 2017 governs the general contractual framework, ensuring your agreement meets standard requirements for formation, interpretation, and enforcement. Proper execution requires signatures from authorized representatives, and corporate borrowers must provide evidence of board resolutions authorizing the security grant.