Anyone wishing to register assignments of receivables (covering many forms of debts) under the Security Interests (Jersey) Law 2012, part of which comes into force next week – and covers non-security assignments of receivables, as well as security interests, should seek guidance now as to how to use the new online register.
This was one of the messages delivered to a well-attended seminar addressed by Julian Lamb, Director, Registry, Jersey Financial Services Commission and Carey Olsen partners Peter German, Nicholas Crocker and Robin Smith.
The long-awaited law is scheduled mostly to come into force at the beginning of 2014, while certain provisions come into force on 1 October this year.
Mr German said: “Unless secured parties are amending existing security interests created under the 1983 Law to extend to new assets, they need not do anything on the introduction of the new law. Registration of current security is not required and existing security will have priority over new law security in the same asset.
“In October the part of the new law dealing with the ability to register assignments of receivables comes into force. Interested parties should contact the Jersey Companies Registry now to seek guidance as to how they may use the register.
“The part of the law dealing with security interests comes into force on 2 January 2014 and in preparation for that date, those who intend to take and register security will need to have appropriate documentation prepared, and understand the registration process.”
Mr Lamb said that introducing the register had been much more complex than anticipated. Lessons had been learned from mistakes made by other jurisdictions and every effort had been made to follow best practice.
Guidance notes and terms and conditions were now available and the Jersey Companies Registry was offering regular training sessions on how to use the software between now and the end of the year. He said that the system was much more than a noticeboard; it was fully searchable and organisations using it regularly could become a registered user which allowed access to more functionality. Secured parties and grantors would be issued with a pin number to allow them access.
Mr Crocker said the new law had taken so long because there had to be a provision for many different sets of circumstances. Fairness results in complexity – while the new law was based on a few simple principles, combining these produces a complex system.
“It’s a statute of very great importance for the Island, and therefore it needed to be drafted with great care. The length of time taken corresponds to the amount of gritty, granular work that has gone on.” He added that the effects of failing to make a necessary registration were an area that could give people difficulties under the new law.
Mr Smith said that the system of registration is one of the main advantages of the new law over its predecessor, as counterparties often assumed a system was already in place. The new law also gave statutory backing to certain market practices on which the current law is silent.
He said that the new facility to register the assignment of book debts also potentially promised to encourage receivables financing, otherwise known as factoring, in Jersey.
The new law offered more options when enforcing security and without reference to the Viscount or a liquidator in the case of a Jersey insolvency.
In terms of preparing the industry for using the new law, Mr German said that those seeking to take security over different types of collateral needed to familiarise themselves with the process as different rules apply to different asset types. It was also important to understand the rules about the priorities of competing security interests in the same collateral.
For more information on the new register or to sign up for training please contact Ann Fleming, Jersey Companies Registry on 01534 822041 or firstname.lastname@example.org.