A number of significant amendments have been made to the Financial Collateral Arrangement Regulations (Legal Notice 177 of 2004, as amended) (the “Regulations”) by virtue of Legal Notice 283 of 2013. Principally, the scope and applicability of the Regulations have been widened to include not only pecuniary claims arising out of an agreement whereby a credit institution grants credit in the form of a loan, but now also include pecuniary claims due to non-natural persons, provided that the debtor of the claims granted as collateral is also a non-natural person. This amendment is generally perceived as a creditor friendly one which supplements other recently introduced creditor friendly instruments such as security by title transfer in terms of the Civil Code (Cap. 16). The notions of “collateral taker” and “collateral provider” have also been widened to include corporations or other legal person, in either case established by law, as well as securitisation vehicles and trusts or non-natural persons acting in a representative capacity of any one or more persons (including holders of securitised debt).
A number of amendments on the other hand have sought to clarify the provisions of the Regulations, in particular, the definition of “instruments” has been amended to clarify that such term includes the instruments referred to in the Investment Services Act (Cap. 370). Additionally, a new proviso has been introduced in regulation 2(2) in order to achieve certainty within contexts where the financial collateral is held by a custodian on behalf of the collateral taker.
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