an introduction to security in common law and civil law ... march/singapore cpd... · an...

An introduction to Security in common law and civil law jurisdictions

Dan MarjanovicPartner

Calvin TanPartner

Rina LeeConsultant

15 March 2017

© Simmons & Simmons LLP 2016. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.

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Overview

Security principles 101

International security laws

Indonesia

Issues to consider when taking/giving security


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What is security?Rights in rem vs in personam

Guarantees & Quasi-security


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Why take security?Paripassu principle

Protection of secured creditors


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Forms of security - Possessory

Pledge

Lien


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Forms of security – Non-possessory

Mortgage

Charge


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Charge

“all present and future assets”

Fixed vs Floating

Priorities

Mortgage vs Charge


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Assets that may be subject to security

Land and buildings Goods Shares

Contractual rights

Bank accounts

Intellectual property

Insurances


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Perfection of securityRegistration

Notice

Possession


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Enforcement of security – Self-help

Enforcement event

Appointment of receiver

Sale of secured assets

Application to debt


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Enforcement of security in the PRC

Enforcement event

Court injunction / Objection

Civil claim / Appeal

Local enforcement / Objection


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Main legal groups

Anglo-American common law• English common law group• American common law group

Napoleonic jurisdictions• Western and Southern Europe• Central and South America• Parts of Africa• Parts of Middle East


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Main legal groups

Roman-Germanic jurisdictions• Germany• Dutch group (including Indonesia)• Switzerland

Mixed / new jurisdictions• East Asia (China, Japan and Taiwan)• Vietnam• Mongolia


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COMPARATIVE LEGAL SYSTEMS IN SOUTH EAST ASIAEXAMPLES (not exhaustive)

COMMON LAW BASED CIVIL LAW BASED

SINGAPORE THAILANDMALAYSIA VIETNAM

HONG KONG INDONESIAPHILIPPINES


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SECURITY COMPARISON TABLE

COMMON ASSET TYPES SINGAPORE INDONESIA

LAND / BUILDINGS LEGAL MORTGAGELEGAL MORTGAGE

(HAK TANGGUNGAN ATAS TANAH or “HT”)

BUSINESS UNDERTAKING

FIXED AND / OR FLOATING CHARGE

NO CONCEPT OF UNIVERAL BUSINESS

CHARGES

SHARESMORTGAGE (LEGAL /

EQUITABLE)

CHARGE (FIXED / FLOATING)PLEDGE (OR FIDUSIA)

CONTRACUAL RIGHTS

ASSIGNMENT (LEGAL / EQUITABLE)

FIXED/FLOATING CHARGE (RECEIVEABLES)

FIDUSIA OVER RECEIVABLES

CONDITIONAL ASSIGNMENT OVER

CONTRACTS


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COMMON ASSET TYPES SINGAPORE INDONESIA

BANK ACCOUNTSCHARGE (FIXED / FLOATING)

ASSIGNMENT (MORTGAGE)PLEDGE

INSURANCES ASSIGNMENT / CHARGE FIDUSIA (OVER PROCEEDS)

GoodsCHARGE (FIXED / FLOATING)

PLEDGE

BILL OF SALE

FIDUSIA

IP MORTGAGE / CHARGE / ASSIGNMENT FIDUSIA

GUARANTEES(although not asset

type)YES YES

SECURITY COMPARISON TABLE


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Forms of security in Indonesia

Pledge – goods, shares, bank accounts

Fidusia – goods, shares, machineries, [buildings, bank accounts and contractual rights?]

Land Mortgage – land together with any buildings and fixtures attached to it.


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• Possession by the pledge/ a collateral manager/ bank

• Shares – shareholder register and for listed shares, blocked by KSEI

Pledge

• Registration – online by a notary• Receivables: Notice + acknowledgmentFidusia

• Registration Mortgage

Perfection of Indonesia security


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Legal issues across jurisdictions

Availability of universal charge

Perfection steps

Availability of a trustee

Preferential creditors


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Restrictions on enforcement

Transaction costs

Financial assistance

Priority between creditors


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Grace period for enforcement

Future debt

Prescribed limits

Negative pledge / restriction on assignment


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Contact us

T +65 6831 5686E [email protected]

Calvin Tan, Partner, Singapore

Calvin specialises in banking & finance, restructuring & insolvency andbanking regulatory matters. He has significant experience advising oncommodity finance, M&A and leveraged finance, funds finance and projectfinance in Asia, Africa and Australia. Calvin’s current client roster includesNatixis, Bank of China, OCBC Bank, Gunvor and Anglo American.


Dan Marjanovic , Partner, Singapore

Dan is a banking and projects partner based in our financial markets practicein Asia. He has considerable experience in acting for banks, corporateborrowers and project parties on major financing transactions in the AsiaPacific region on matters ranging from acquisition financings, the developmentand financing of infrastructure projects in the energy/oil & gas and transportsectors, electricity generation (including Cleantech), water and wastewaterprojects, mines and mining related activities, commodity trade flows and arange of structured financing transactions.


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Contact us


Rina Lee, Consultant, Singapore

Rina is an experienced Indonesian lawyer who has worked for internationalcompanies and financial institutions on Indonesian law matters. Most recentlyRina was noted by Chambers & Partners as a “notable practitioner” saying“Singapore based Rina Lee has a great deal of experience in Indonesia andworks on mining, banking and M&A matters.” Rina also has oil & gasexperience.


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