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Third Party Security Agreement Template for Malaysia

This document is a comprehensive security agreement governed by Malaysian law, designed for situations where a third party provides security for another party's obligations. It establishes the legal framework for creating and enforcing security interests over assets provided by a party who is not the primary debtor. The agreement complies with Malaysian securities and contract law requirements, including the Contracts Act 1950 and relevant financial services legislation, and includes provisions for enforcement under Malaysian jurisdiction.

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What is a Third Party Security Agreement?

The Third Party Security Agreement is a crucial document in Malaysian financial and commercial transactions where security for obligations is provided by someone other than the primary debtor. This arrangement is common in corporate group structures, family businesses, or where business partners provide cross-security. The agreement must comply with Malaysian legal requirements, including the Contracts Act 1950, Companies Act 2016, and relevant financial services regulations. It details the security assets, rights and obligations of all parties, enforcement mechanisms, and includes necessary provisions for registration and perfection of security interests. The document is particularly important in protecting the interests of both the security provider and the secured party while ensuring the arrangement is legally enforceable under Malaysian law.

What sections should be included in a Third Party Security Agreement?

1. Parties: Identifies and defines all parties: the Security Provider (third party), the Debtor (principal debtor), and the Secured Party (creditor)

2. Background: Explains the context of the security arrangement, including reference to the principal debt/facility agreement and the relationship between parties

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Security Interest Creation: Core provisions creating and establishing the security interest over the specified assets

5. Representations and Warranties: Standard and security-specific representations and warranties by the Security Provider

6. Covenants: Positive and negative obligations of the Security Provider regarding the secured assets

7. Enforcement: Rights and powers of the Secured Party upon enforcement, including appointment of receivers

8. Power of Attorney: Appointment of the Secured Party as attorney for specific security-related purposes

9. Payments and Application: Provisions regarding payments, application of proceeds, and currency provisions

10. General Provisions: Standard boilerplate clauses including notices, assignments, amendments, and governing law

What sections are optional to include in a Third Party Security Agreement?

1. Further Security: Additional security arrangements that may be required for specific assets or jurisdictions

2. Insurance: Specific insurance requirements for secured assets, included when physical assets are part of security

3. Security Margin: Provisions for maintaining specific security value ratios, used for fluctuating value assets

4. Cross-Default: Provisions linking defaults under other agreements, used in complex security structures

5. Currency Protection: Special provisions for cross-border transactions or multiple currency facilities

6. Tax Provisions: Detailed tax-related provisions when security arrangement has significant tax implications

What schedules should be included in a Third Party Security Agreement?

1. Schedule 1 - Secured Assets: Detailed description and/or list of assets subject to the security interest

2. Schedule 2 - Secured Obligations: Description of the obligations being secured, including reference to facility agreements

3. Schedule 3 - Form of Notice: Standard form notices required for perfection of security (if applicable)

4. Schedule 4 - Powers of Receiver: Detailed list of receiver's powers upon enforcement

5. Schedule 5 - Security Provider Details: Detailed information about the Security Provider including asset ownership details

6. Appendix A - Required Filings: List of necessary registrations and filings for security perfection

Authors

Alex Denne

Head of Growth (Open Source Law) @ 黑料视频 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malaysia

Publisher

黑料视频

Document Type

Security Agreement

Cost

Free to use

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