New Regulation for the pledging of securities
On 29th December 2011, Regulation No 59 of 2011 “Specifying the Procedures to be followed for the Registration of Pledges and Liens on Securities and the Discharge and Lifting of such Pledges and Lien”, came into force.
The Regulation is aimed at addressing the current issues and difficulties faced by all related parties involved in the pledging of securities, in order to provide the market with a clear template to protect the rights and interests of mortgagees, maintaining an efficient mechanism for the performance of the obligations of mortgagors and to avoid potential unlawful transactions on the pledged securities.
The Regulation does not replace current laws relating to the establishment or imposition of securities mortgage agreements, and regulated parties should continue to comply with existing laws.
All capital market service providers, including financial institutions maintaining the securities of listed companies as collateral or any other party who has entered into a securities mortgage agreement or contract, is required to ensure that their shareholders, partners and clients comply with the requirements of this Regulation in general, and in particular with the requirements in Article 30 of the Regulation.
For more information on the new Regulations or any other issues relating to the banking sector please contact:
Mark Adams or Melanie Henry.