Can a single security agreement be used to take security over all of a company’s assets or are separate agreements required in relation to each type of asset?
Lending & Secured Finance
A single security agreement can be used to take security over all of a company’s assets, although in practice, since the requirements and the procedure for creation, registration and enforcement of security are different for different types of assets, separate agreements are usually used.
A single security agreement over all assets would be excessively complicated and unmanageable. In addition, depending on the security provided, the contracting parties are not always identical. Moreover, the statutory requirements regarding form and registration of pledge differ based on the respective security agreement. This would complicate the drafting and handling of contracts to such an extent that such contracts are not concluded in practice.
However, strictly speaking, it is possible to establish a pledge over the business enterprise or other collective thing (e.g. stock inventory) based on a single pledge agreement in form of a notary deed.
Yes, a single security agreement may be used to take security over all of a company’s assets.
Separate security agreements are usually used for taking security over individual types of assets. In particular cases it can, however, be desirable to integrate different types of security in one single agreement.
Separate agreements in relation to each type of assets will be required in Spain. Spanish law does not recognise the concept of floating charges, however, the specification of certain types of Spanish security may result in a similar effect.
A single security agreement can be used to take security over all of a company’s assets provided the description of the collateral, whether it is specific or general, reasonably identifies the collateral.
A single agreement may be used to take security over all of a company’s assets. Nevertheless, as certain provisions need to be adapted for the asset type (e.g. in relation perfection and enforcement), it is preferred in Sweden to use separate security agreements in relation to each type of asset.
A commercial enterprise pledge within the scope of the Movable Pledge Law allows for any and all kinds of movable assets allocated to the operations of a commercial enterprise, as well as the commercial title and the intellectual property rights of the enterprise be pledged as a whole under a single pledge agreement. Please refer to Question 4(d) for details. We note that such commercial enterprise pledge would not cover the shares of the relevant company. Establishing mortgage over real estate and pledge over shares would require separate security agreements.
A single security agreement can be used to take a security interest in all of a company’s personal property assets or assets that are subject to the Uniform Commercial Code. A mortgage or deed of trust would be used to grant a security interest in any of the company’s real property. Real property generally means real estate, which would include land and anything that is attached to the land or erected on it. Real property excludes anything that may be removed from the land without causing injury to the land.
It is standard practice in Switzerland to have separate security documents for the different types of assets.
Yes. In England and Wales mortgages, charges, assignments and floating charges are often incorporated into one overarching security document called a “debenture”, although that can often be supplemented by additional specific security over a specific discrete asset, such as an assignment of a keyman insurance policy.
Unlike in other jurisdictions, it is not possible under Jersey law to take security over all assets and undertaking of a company in one single agreement.
The methods of creating security over Jersey real property and tangible movable property are described in question 4 above.
In the case of Jersey intangible movable property, under SIL it is possible to take security over various classes of asset in one security agreement. SIL envisages that enforcement powers may be exercised more than once and in respect of all or part of the collateral secured.
Subject to the lex situs rule (see our response to Question 4 above) and our comments below, it is possible to use a single Hong Kong law security agreement to take security over all of a Hong Kong company's assets situated in Hong Kong. However, under Hong Kong law, a Hong Kong ship mortgage must be in the prescribed form, and it is common to supplement the form (which only contains some basic details of the parties of the underlying vessel) with a separate security deed. Similarly, it is necessary for a separate mortgage over real property after acquiring such real property to facilitate registration of it at the Hong Kong Lands Registry.
A single security agreement cannot be used to take security over all of a company´s assets, because under Austrian law a pledge can only be established on individually determined objects (principle of specialty) – see also answer to question 5. Due to the various perfection requirements for the different types of securities, it is common market practice in Austria to have separate security agreements for each type of asset.
Yes. The most frequently used agreement for this type of security is the pledge (prenda), whether simple, floating or nonpossessory.