Singapore legislation
Section 81SS
Section 81SS
Security interest
(1)
Except as provided in this section or any other written law or any regulations made under section 81SU, no security interest may be created in book‑entry securities.
(2)
A security interest in book‑entry securities to secure the payment of a debt or liability may be created in favour of any depositor in the following manner:
by way of assignment, by an instrument of assignment in the prescribed form executed by the assignor;
by way of charge, by an instrument of charge in the prescribed form executed by the chargor,if no security interest in any book‑entry securities subsequent to any assignment or charge thereof may be created by the assignor or the chargor (as the case may be) in favour of any other person and any such assignment or charge is void.
(3)
Upon receipt of the instrument of assignment, the Depository must immediately, by way of an off‑market transaction, transfer the book‑entry securities to the assignee and thereafter notify the assignor and the assignee of the transfer in the prescribed manner.
(4)
Upon receipt of the instrument of charge, the Depository must immediately register the instrument in a register of charges maintained by the Depository and thereafter notify the chargor and the chargee in the prescribed manner.
(5)
The register of charges is not open to inspection to any person other than the chargor or the chargee or their authorised representatives and except for the purpose of the performance of its duties or the exercise of its functions or when required to do so by any court or under the provisions of any written law, the Depository must not disclose to any unauthorised person any information contained in the register of charges.
(6)
An assignment or a charge made in accordance with the provisions of this section, but not otherwise, has effect upon the Depository transferring the book‑entry securities or endorsing the charge in the register of charges except that, where the instrument of assignment or charge specifies the number of book‑entry securities to which the assignment or charge relates, the instrument of assignment or charge does not have any effect if on the date of receipt of such instrument, the number of book‑entry securities in the account of the assignor or chargor is less than the number of book‑entry securities specified in such instrument.
(7)
The provisions of section 81SJ(1), (2) and (3) apply to an assignment of book‑entry securities made under this section.
(8)
An assignee or a registered chargee of book‑entry securities has the following powers:
a power, when the loan or liability has become due and payable, to sell the book‑entry securities or any part thereof and in the case of a chargee, the chargee has the power to sell the book‑entry securities or any part thereof in the name of and for and on behalf of the chargor;
any other power which may be granted to the assignee or registered chargee in writing by the assignor or chargor in relation to the book‑entry securities provided that the Depository is not concerned with or affected by the exercise of any such power.
(9)
Nothing in subsection (8) is to be construed as imposing on the Depository a duty to ascertain whether the power of sale has become exercisable or has been lawfully exercised by the assignee or chargee.
(10)
No book‑entry securities assigned by way of security or charged in accordance with the provisions of this section may be —
transferred by way of an off‑market transaction to the assignor except upon the production of a duly executed re‑assignment in the prescribed form; or
transferred by the chargor, by way of sale or otherwise, except —
upon the production of a duly executed discharge of charge in the prescribed form; or
upon the return of such book‑entry securities to the chargor’s control with the approval in writing of the chargee.
(10A)
A charge on book‑entry securities made in accordance with the provisions of this section is treated as discharged if such book‑entry securities have been returned to the chargor’s control with the approval in writing of the chargee.
(11)
Upon the sale by the assignee or the chargee in exercise of the assignee’s or chargee’s power of sale of any book‑entry securities assigned or charged in accordance with the provisions of this section, the assignee or the chargee must immediately notify the Depository of the sale and the particulars of the book‑entry securities sold by the assignee or chargee, and the Depository must —
in the case of the sale by the assignee, notify the assignor of the sale; and
in the case of the sale by the chargee, effect a transfer of the book‑entry securities to the buyer in accordance with section 81SM and notify the chargor of the transfer,and the provisions of sections 81SO, 81SP and 81SR apply, with the necessary modifications, to a transfer effected pursuant to this section.
(12)
Upon fulfilling the assignor’s or the chargor’s obligations under an assignment by way of security or a charge, the assignor or the chargor is entitled to obtain from the assignee or chargee a re‑assignment or a discharge of charge (as the case may be) of the whole or part of the book‑entry securities.
(13)
A re‑assignment or discharge of charge is to be effected by the Depository by transferring the book‑entry securities to the assignor or cancelling the endorsement of charge in the register of charges and in the chargor’s account, as the case may be.
(14)
Book‑entry securities may be assigned by way of security by an assignee or charged in the prescribed form by a chargee to secure the payment of any debt or liability of the assignee or the chargee (as the case may be) in accordance with the provisions of this section provided that no book‑entry security may be charged by a chargee subsequent to any sub‑charge.
(15)
All acts, powers and rights which might previously have been done or exercised by the chargee thereunder in relation to the book‑entry securities may thereafter be done or exercised by the sub‑chargee, and, except with the consent of the sub‑chargee, must not be done or exercised by the chargee thereunder during the currency of the sub‑charge.
(16)
Upon the sale by the sub‑chargee in exercise of the sub‑chargee’s power of sale of any book‑entry securities in accordance with the provisions of this section, the provisions of subsection (11), in respect of a sale by a chargee, apply with the necessary modifications to the sale by the sub‑chargee.
(17)
Nothing in subsection (14) affects the rights or liabilities of the original assignor or chargor of the book‑entry securities under subsections (12) and (13) and the original assignor or chargor is entitled to a re‑assignment or discharge of charge from the assignee or chargee free from all subsequent security interests created without the original assignor’s or chargor’s consent upon satisfying the original assignor’s or chargor’s indebtedness or liability to the assignee or the chargee.
(18)
The provisions of section 81SN apply to relieve the Depository and its servants or agents of any liability in respect of any act done or omission made under this section as if references to depositor include references to assignee, chargee or sub‑chargee, as the case may be.
(19)
Nothing in this section affects the validity and operation of floating charges on book‑entry securities created under the common law before or after 12 November 1993, but the Depository is not required to recognise, even when having notice thereof, any equitable interest in any book‑entry securities under a floating charge except the power of the chargee, upon the crystallisation of the floating charge, to sell the book‑entry securities in the name of the chargor in accordance with the provisions of this section.
(20)
Nothing in subsection (19) is to be construed as imposing on the Depository a duty to ascertain whether the power of sale pursuant to a floating charge has become exercisable or has been lawfully exercised.
(21)
A member of SGX‑ST has a lien over the unpaid book‑entry securities purchased for the account of its customer which is enforceable by sale in accordance with and subject to the provisions of this section as if the same had been charged to the member under this section, except that the member is not obliged to notify the Depository of the sale or the particulars of the book‑entry securities sold by the member.
(22)
Any security interest on book‑entry securities created before 12 November 1993 and subsisting or in force on that date continues to have effect as if the Companies (Amendment) Act 1993 had not been enacted.
(23)
In this section, “off‑market transaction” means a transaction effected outside the SGX‑ST.