31 July 2013
A new Law will come into force from October 2013 that will modernise the process of bank lending and financing transactions in Jersey.
An Appointed Day Act brought forward by the Minister for Economic Development to bring the Security Interests (Jersey) Law 2012 into force was adopted by the States Assembly on 17 July 2013.
The Security Interests (Jersey) Law 2012, as amended by the Security Interests (Amendment of Law) (Jersey) Regulations 2013, will now come into force in two phases with registration provisions for existing assignments of receivables coming into force on 1 October 2013 and the remainder of the Law coming into force on 2 January 2014. The Law enables security to be taken over intangible movable property, which includes investment securities (including shares, units and debentures), contractual rights, bank accounts, securities accounts and receivables.
The Law creates a new regime for taking security by repealing the existing 1983 Law. The Law will be used in a variety of both local and international finance transactions where loans can be secured against intangible movable assets. A number of provisions within the Law reflect the approach taken in the United States, Canada, New Zealand and Australia, and its adoption forms part of a larger series of amendments that will assist businesses and individuals to access loans by borrowing on the strength of movable property.
The draft Law is the product of extensive consultation with interested parties, both through meetings with consultees and written comments. It has been designed to give Jersey one of the most up-to-date legal regimes in the field and will enhance the Island’s attractiveness both for local and foreign businesses.
The Minister for Economic Development, Senator Alan Maclean, said “I am delighted that the Security Interests Law was approved by the States Assembly and am firmly of the view that this new Law will prove to be of significant benefit to the Island’s financial services sector.
“Replacing a Law that underpins the activities of the finance sector both locally and internationally is no small task but through significant consultation with industry, Jersey Finance and the Jersey Financial Services Commission, I am confident the Island is placing itself at the cutting edge in this area.
“Intangible property in general, and investment securities in particular, are of huge importance as security in modern financing. Jersey’s position as a leading offshore international finance centre makes it important that the existing legal framework governing the creation of security interests is kept up to date.”
Heather Bestwick, Deputy CEO/Technical Director, Jersey Finance Limited, said “The new Law will represent a major development in the Jersey law of security over intangible movable property. The central objective of the Law is to provide Jersey with a simplified, efficient and modern regime for the creation, perfection, priority, transfer and enforcement of security interests in intangible movables and their proceeds.
“It will facilitate the creation and protection of security interests and assignments with the minimum of formality and lay down priority rules that meet the reasonable expectations of the business community. We are anticipating an increased amount of financing and refinancing activity involving Jersey entities once the new Law comes into force for new security interests on 2 January 2014.”
One of the key parts of the Law has been the creation of a Security Interests Register which is being housed by the Companies Registry of the Jersey Financial Services Commission and can be accessed via their website. The register allows for an open and searchable database of security interests and assignments of receivables, which will in turn stimulate lending.
In due course, it is envisaged that the Law will be extended to tangible movable property, which may include motor vehicles, business assets such as plant machinery and certain other high value movable items. It is envisaged that the extension of the Law will be particularly beneficial to stimulating lending in the local community whilst equally benefiting the financial services industry.