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Collateral Trust Agreement for United Arab Emirates

Collateral Trust Agreement Template for United Arab Emirates

This agreement establishes a trust arrangement under UAE law for holding and managing collateral security on behalf of secured creditors. It complies with UAE Federal laws including the Civil Code, Commercial Code, and relevant Central Bank regulations. The document details the appointment of a trustee, defines the collateral assets, establishes the trust mechanism, outlines the rights and obligations of all parties, and provides for enforcement procedures in accordance with UAE legislation. It includes specific provisions for UAE security perfection requirements and can be structured to accommodate both conventional and Shariah-compliant transactions.

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What is a Collateral Trust Agreement?

A Collateral Trust Agreement is a crucial document in secured financing arrangements under UAE law, particularly in complex transactions involving multiple creditors or syndicated facilities. This agreement establishes a trust structure where a qualified trustee holds and manages collateral on behalf of secured parties, ensuring efficient security management and enforcement. It is commonly used in project finance, syndicated lending, and structured finance transactions where centralized collateral management is required. The document must comply with UAE Federal Law No. 5 of 1985 (Civil Code), UAE Federal Law No. 18 of 1993 (Commercial Code), and UAE Central Bank regulations. The agreement can be adapted for both conventional and Islamic finance structures, making it particularly versatile in the UAE market. It typically includes detailed provisions for collateral administration, trustee duties, enforcement mechanisms, and the rights of secured parties, all within the framework of UAE law.

What sections should be included in a Collateral Trust Agreement?

1. Parties: Identifies the trustee, beneficiaries (secured parties), and grantor/settlor of the trust

2. Background: Sets out the context of the underlying secured obligations and purpose of the trust arrangement

3. Definitions: Defines key terms used throughout the agreement, including types of collateral, secured obligations, and relevant documentation

4. Declaration of Trust: Establishes the trust arrangement and confirms the trustee's acceptance of appointment

5. Collateral and Security: Describes the collateral subject to the trust and methods of perfection

6. Trustee Powers and Duties: Details the trustee's authorities and responsibilities in managing the collateral

7. Representations and Warranties: Standard representations from all parties regarding capacity, authority, and collateral ownership

8. Covenants: Ongoing obligations of the parties regarding maintenance and management of collateral

9. Events of Default: Specifies circumstances constituting default and triggering enforcement rights

10. Enforcement: Procedures for enforcing security interests in compliance with UAE law

11. Fees and Expenses: Details trustee compensation and expense reimbursement arrangements

12. Term and Termination: Duration of the agreement and circumstances for termination

13. Governing Law and Jurisdiction: Confirms UAE law governance and jurisdiction for disputes

What sections are optional to include in a Collateral Trust Agreement?

1. Security Agent Provisions: Required when involving a security agent structure for syndicated facilities

2. Parallel Debt: May be needed in cross-border transactions to create a direct claim for the trustee

3. Shariah Compliance: Required when the arrangement needs to comply with Islamic finance principles

4. Multiple Creditor Provisions: Needed when managing collateral for multiple creditors with different priorities

5. Intercreditor Provisions: Required when establishing ranking and priorities among different classes of secured parties

6. Foreign Law Security: Needed when collateral includes assets located outside the UAE

What schedules should be included in a Collateral Trust Agreement?

1. Schedule 1 - Description of Collateral: Detailed listing and description of all collateral assets

2. Schedule 2 - Form of Accession Deed: Template for additional parties to join the agreement

3. Schedule 3 - Security Documents: List and copies of all related security documents

4. Schedule 4 - Notice and Acknowledgment Forms: Standard forms for notifying relevant parties of the security interest

5. Schedule 5 - Fee Schedule: Detailed breakdown of trustee fees and payment terms

6. Schedule 6 - Administrative Details: Contact information and payment instructions for all parties

7. Appendix A - Operating Procedures: Detailed procedures for collateral management and custody

8. Appendix B - Reporting Requirements: Templates and timing for required reports and notifications

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions













































Clauses






























Relevant Industries

Banking and Financial Services

Investment Banking

Corporate Finance

Real Estate and Construction

Infrastructure Development

Energy and Natural Resources

Manufacturing

Trading and Commerce

Islamic Finance

Asset Management

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Finance

Credit Administration

Security Operations

Trust Services

Transaction Management

Relevant Roles

Chief Legal Officer

General Counsel

Legal Director

Finance Director

Chief Financial Officer

Treasury Manager

Security Trustee

Compliance Officer

Risk Manager

Transaction Manager

Corporate Finance Manager

Senior Legal Counsel

Banking Lawyer

Security Agent

Trust Officer

Credit Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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