Template:Charges in ireland: Difference between revisions
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These include [[mortgage]]s and [[charge]]s created over an interest in: | These include [[mortgage]]s and [[charge]]s created over an interest in: | ||
:(a) [[cash]];<ref>I know, I know. You can’t take [[security]] over [[cash]]. But if you try, then even if you could, you couldn’t, unless you registered your attempt. But since you can’t ... I’ll get my coat.</ref> | :(a) [[cash]];<ref>I know, I know. You can’t take [[security]] over [[cash]]. But if you try, then even if you could, you couldn’t, unless you registered your attempt. But since you can’t ... I’ll get my coat.</ref> | ||
:(b) [[deposit]]s and [[money]] credited to bank | :(b) [[deposit]]s and [[money]] credited to bank accounts; | ||
:(c) [[share]]s, [[bond]]s or [[Debt securities|debt instruments]]; | :(c) [[share]]s, [[bond]]s or [[Debt securities|debt instruments]]; | ||
:(d) [[money market fund]]s or [[collective investment scheme]] units; or | :(d) [[money market fund]]s or [[collective investment scheme]] units; or | ||
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''But''. | ''But''. | ||
That | That isn’t necessarily how the [[Central Bank of Ireland]] sees it. Matheson warns<ref>[https://www.matheson.com/images/uploads/publications/Companies_Act_2014_Registration_and_Priority_of_Charges_June_2015.doc.pdf “The Companies Act 2014: Registration and Priority of Charges”]</ref> that the registrar tends to take a conservative approach to excluding charges from the registration requirement on account of the ''[[Financial Collateral Arrangement Regulations]]'' — by which it means if you have a general charging clause that mainly concerns financial collateral, but includes non-[[Financial Collateral Regulations|FCR]]-eligible forms of [[security]] as well you still have to register the whole thing — so you may still find local counsel for Irish [[espievie]]s insisting that you register charges with the CBI, notwithstanding the Emerald Isle’s continued membership of the [[European Union]].<ref>“... Charges over all categories of assets are now registerable save for certain specific exclusions (including, for example, a charge created over an interest in cash or in shares in an Irish company). Thus, particulars of every charge created by a company over any property need to be delivered to the CRO, save for charges over non-registrable assets.” — [https://www.lawsociety.ie/Solicitors/Practising/Practice-Notes/Priority-and-registration-of-charges/#.XdusMtWwmiM Irish Law Society bulletin].</ref> | ||
Here is where the lawyer’s yen for over-particularity can be a self-snooker. A [[prime broker]] or a [[custodian]] will like to take a general charge over not just securities, but the fund’s claim against the [[custodian]] in whose accounts they sit (even though that will usually be itself), and all the fund’s rights against its counterparties under market transactions (even though they will (largely) be itself). It is a moot point whether claims under a swap transaction ''referencing'' a bond or share count as “claims and rights over any of the above” so the [[path of least resistance]], paved with good intentions though it is, is just to register the charge and be done with it. | |||
====The JC says==== | |||
But for what it is worth, Central Bank of Ireland, the [[JC]] doesn’t think such a literal reading of the [[Financial Collateral Directive]] is the most productive use of your moral authority or the industry’s time, at any rate where dedicated [[investment fund]]s, whose only ''raison d’etre'' is to invest in financial assets and their derivatives, are concerned.<br> | |||
Revision as of 09:09, 18 March 2020
Registering charges of securities and cash in Ireland
You are having commercial relations with an Irish espievie. You want it to grant you security. Do you need to register your charge?
Your starting point would be well, since Ireland is still a member of the EU, and an enthusiastic one at that, and as such is obliged to implement the Financial Collateral Directive into domestic law. Since that happy statute has done away with the tiresome yet strangely exhilarating business of having to register charges with the domestic agency responsible for monitoring those things things in your member state, the answer, on a commonsense application of principles of European Law, ought to be “no”.
And, indeed the Irish Financial Collateral Arrangement Regulations, as incorporated into the Irish Companies Act 2014 provide that certain types of charges do not actually count as “charges” for the purposes of Section 408(1) of the Irish Companies Act 2014 and therefore do not need to be registered under Section 409.
These include mortgages and charges created over an interest in:
- (a) cash;[1]
- (b) deposits and money credited to bank accounts;
- (c) shares, bonds or debt instruments;
- (d) money market funds or collective investment scheme units; or
- (e) claims and rights (such as dividends or interest) over any of the above.
But.
That isn’t necessarily how the Central Bank of Ireland sees it. Matheson warns[2] that the registrar tends to take a conservative approach to excluding charges from the registration requirement on account of the Financial Collateral Arrangement Regulations — by which it means if you have a general charging clause that mainly concerns financial collateral, but includes non-FCR-eligible forms of security as well you still have to register the whole thing — so you may still find local counsel for Irish espievies insisting that you register charges with the CBI, notwithstanding the Emerald Isle’s continued membership of the European Union.[3]
Here is where the lawyer’s yen for over-particularity can be a self-snooker. A prime broker or a custodian will like to take a general charge over not just securities, but the fund’s claim against the custodian in whose accounts they sit (even though that will usually be itself), and all the fund’s rights against its counterparties under market transactions (even though they will (largely) be itself). It is a moot point whether claims under a swap transaction referencing a bond or share count as “claims and rights over any of the above” so the path of least resistance, paved with good intentions though it is, is just to register the charge and be done with it.
The JC says
But for what it is worth, Central Bank of Ireland, the JC doesn’t think such a literal reading of the Financial Collateral Directive is the most productive use of your moral authority or the industry’s time, at any rate where dedicated investment funds, whose only raison d’etre is to invest in financial assets and their derivatives, are concerned.
- ↑ I know, I know. You can’t take security over cash. But if you try, then even if you could, you couldn’t, unless you registered your attempt. But since you can’t ... I’ll get my coat.
- ↑ “The Companies Act 2014: Registration and Priority of Charges”
- ↑ “... Charges over all categories of assets are now registerable save for certain specific exclusions (including, for example, a charge created over an interest in cash or in shares in an Irish company). Thus, particulars of every charge created by a company over any property need to be delivered to the CRO, save for charges over non-registrable assets.” — Irish Law Society bulletin.