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Security Agreement For Promissory Note for Malaysia

Security Agreement For Promissory Note Template for Malaysia

A Security Agreement for Promissory Note is a crucial legal document used in Malaysian secured lending transactions that creates a security interest in favor of a creditor to secure the obligations evidenced by a promissory note. The agreement operates under Malaysian law, particularly the Contracts Act 1950 and Bills of Exchange Act 1949, and establishes the creditor's rights over specified collateral in the event of default. It details the nature of the security, the obligations being secured, enforcement mechanisms, and the parties' respective rights and obligations, all while ensuring compliance with Malaysian secured transactions law and regulatory requirements.

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What is a Security Agreement For Promissory Note?

The Security Agreement For Promissory Note is a vital instrument in Malaysian secured lending practices, commonly used when a lender requires collateral to secure a debt evidenced by a promissory note. This document becomes necessary when parties wish to create a legally enforceable security interest over specific assets while ensuring compliance with Malaysian secured transactions law, particularly the Contracts Act 1950 and Bills of Exchange Act 1949. The agreement serves to protect the lender's interests by providing clear enforcement rights and remedies in case of default, while also defining the borrower's obligations regarding the maintenance and preservation of the collateral. It is especially relevant in commercial lending scenarios where the underlying promissory note represents a significant financial obligation and the parties seek to establish a robust security arrangement under Malaysian law.

What sections should be included in a Security Agreement For Promissory Note?

1. Parties: Identifies the secured party (creditor) and the security provider (debtor), including their full legal names, registration numbers if companies, and addresses

2. Background: Explains the context of the security agreement, references the promissory note, and states the purpose of creating the security interest

3. Definitions and Interpretation: Defines key terms used in the agreement and sets out rules for interpreting the document

4. Creation of Security Interest: Establishes the security interest over the collateral and specifies the secured obligations

5. Representations and Warranties: Security provider's confirmations regarding ownership, authority to grant security, and status of the collateral

6. Covenants: Ongoing obligations of the security provider regarding maintenance and preservation of the collateral

7. Events of Default: Specifies circumstances that constitute default under the agreement

8. Enforcement Rights: Details the secured party's rights and remedies upon default

9. Power of Attorney: Appointment of the secured party as attorney to perfect or enforce the security interest

10. Notices: Specifies how and where notices under the agreement must be given

11. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, amendments, and severability

What sections are optional to include in a Security Agreement For Promissory Note?

1. Insurance: Required when the collateral needs to be insured, specifying insurance requirements and rights to insurance proceeds

2. Further Assurance: Used when additional documentation or actions may be needed to perfect the security interest

3. Assignment and Transfer: Include when the parties want to specifically address rights to assign or transfer the security interest

4. Security Provider's Possession: Include when the security provider will retain possession of the collateral, specifying conditions of possession

5. Priority Arrangements: Required when there are or may be other security interests over the same collateral

6. Costs and Expenses: Detailed section on cost allocation, needed when significant expenses are anticipated in maintaining or enforcing the security

What schedules should be included in a Security Agreement For Promissory Note?

1. Schedule 1 - The Promissory Note: Copy or details of the promissory note being secured

2. Schedule 2 - Description of Collateral: Detailed description of all assets or property serving as collateral

3. Schedule 3 - Secured Obligations: Detailed description of all obligations secured by the agreement

4. Schedule 4 - Existing Security Interests: List of any existing security interests or encumbrances over the collateral

5. Schedule 5 - Form of Notice: Standard form for any notices required under the agreement

6. Appendix A - Required Filings: List of all registrations and filings required to perfect the security interest

7. Appendix B - Execution Requirements: Specific requirements for execution and perfection of the security interest

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

Jurisdiction

Malaysia

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions




























Clauses




























Relevant Industries

Banking and Financial Services

Commercial Lending

Asset Finance

Corporate Finance

Real Estate

Manufacturing

Trading and Distribution

Small and Medium Enterprises

Professional Services

Construction

Relevant Teams

Legal

Finance

Risk Management

Compliance

Corporate Secretarial

Credit Administration

Treasury

Commercial Banking

Documentation

Corporate Finance

Relevant Roles

Legal Counsel

Finance Manager

Credit Risk Officer

Corporate Finance Manager

Loan Officer

Compliance Officer

Security Trustee

Commercial Banking Manager

Legal Documentation Specialist

Risk Management Officer

Corporate Secretary

Treasury 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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