Security Documentation – Minimum Standards
(a) Minimum Standards for Security Documentation
In addition to any other requirements set out in this Transactional Support Website or elsewhere, firms should ensure that all security documentation meets the minimum standards set out below.
In any case where any of the minimum requirements are not going to be met, the firm should raise this as early as possible with their usual bank contact for the transaction. The bank will then confirm whether any relevant internal exception has been obtained or whether the minimum requirement must be adhered to.
Where a firm instructs foreign counsel to prepare or negotiate any foreign law security, the firm must ensure that foreign counsel are aware of these requirements and that they should likewise highlight to the Bank any instance where the requirements are not going to be met.
Firms should note that the items noted below are not intended to be an indication of the bank’s only requirements; instead they are designed to assist in highlighting points or suggesting the usual types of protection that the bank would expect. Further protections and provisions would be expected as considered relevant and appropriate by the relevant firm based on the type and risk profile of each transaction.
(b) Minimum standards
1. Secured Assets* - The assets subject to the security must be clearly identified.
2. Secured Liabilities - All liabilities which are to be secured must be clearly identified. (Note – “all monies” security satisfies this requirement.)
3. Effect as a deed# - English law governed security documentation must be drafted and take effect as a deed.
4. Further Assurance* - The security documentation must contain a provision that the grantor of the security will on request execute any document and take any actions required to perfect the security.
5. Transferability and disclosure of information - The security documentation must be capable of transfer or disclosure consistent with associated facility agreement.
6. Legal Opinions re validity and enforceability of security documentation - Security not based on bank standard form documentation must be supported by a legal opinion which states that the security documentation represents a legally effective and enforceable obligation. Where security is given over assets which are not located in England, Wales or Scotland a legal opinion must be provided on the legal effectiveness and enforceability of the security documentation (other than where security is taken over assets by RBSI and RBSI template documentation is used).
* Not applicable to guarantees.
# Not applicable to guarantees contained in a facility document.