SINGAPORE Law and Practice Contributed by: Renu Menon, May Ng, Blossom Hing, SC and Ong Ken Loon, Drew & Napier LLC
is not against public policy. A non-exhaustive list of such common classes of collateral is set out below. Real Property A legal or equitable mortgage/charge or assignment of sale and purchase/lease/building agreement with mortgage-in-escrow is commonly granted over real property (land and to the extent immovable, plant and buildings thereon). The specific type of security will depend on, amongst other factors, whether title over the land has been issued, the land type and the type of holding. There are two types of land in Singapore – common law titled land and land under the Land Titles Act (LTA). A legal mortgage over land under the LTA must be in a statutorily prescribed form and registered with the Singapore Land Authority (SLA). Where title to the land under the LTA has not been issued, a lender may take an equitable mortgage by way of an assignment of the sale and purchase/lease/building agreement, with an accompanying mortgage-in-escrow to be perfected upon the issuance of title. Related security like assignments over insurances, rental and sale proceeds and agreements, and in respect of land under construction, assignments over construction contracts and performance bonds, are usually also taken. Machinery and Equipment Security over machinery and equipment is commonly taken by way of a fixed charge or debenture. Receivables/Bank Accounts Security over receivables and credit balances in bank accounts (being choices in action) are taken by way of an assignment or charge by a deed of assignment/ charge or a debenture, depending on the security package to be taken. Lenders may also, for control purposes, obtain a charge (fixed or floating) over bank accounts into which the receivables are paid. To take a legal assignment over receivables/credit balances, it must be in writing with express written notice given to the debtor of the receivables. The giving of notice by the security provider to such counter parties/account banks also enables the lender to perfect the security and secure priority.
A charge over receivables can be fixed or floating. Where the lender is able to control the receivables and they are not subject to withdrawals without consent, a legal assignment or fixed charge may be created over the receivables. Often, however, the receivables are part of the ongoing business of the security provider and the lender does not seek to take control over the same. In such cases, only a floating charge may be created in substance, regardless of how the charge is termed in the documentation. Inventory Typically, a floating charge is created over inventory. The security provider will generally be permitted to deal with the inventory in the ordinary course of its business until the occurrence of a default event under the facility or notice from the lender, thereby crystalis- ing the charge. Shares Shares in Singapore may be in certificated/scrip or scripless form. Where shares are certificated, a legal or equitable mortgage may be taken over the shares. A legal mort- gage may be granted by way of a share mortgage, accompanied by a transfer and registration of the shares and delivery of share certificates in the mort- gagee’s name. An equitable mortgage/charge may be granted by way of a share mortgage/charge, accom- panied by signed blank transfers and the delivery of the share certificates. Where shares are in scripless form (ie, book-entry securities, being listed shares on the SGX), by statute, security may be taken over such shares by a statutory assignment or charge in prescribed form registered with the Central Depository (Pte) Limited, or by com- mon law subject to certain prescribed requirements. Perfection requirements in relation to the above secu- rities would include stamping (within 14 days of exe- cution of the securities in Singapore (or within 30 days of its receipt into Singapore if executed outside Sin- gapore) for up to the maximum amount of SGD500), registration of the charges with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) (within 30 days of execution of the securities in Sin-
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