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A Control Agreement lets a lender maintain legal control over a borrower's bank accounts or other financial assets in Nigeria. It's a three-way contract between a lender, borrower, and the financial institution holding the assets, typically used in secured lending transactions.

Under Nigerian banking regulations and the Secured Transactions in Movable Assets Act, these agreements give lenders important rights when securing their loans. They can block the borrower from moving funds without permission and ensure the lender gets paid first if the borrower defaults. Banks often require Control Agreements before approving major commercial loans or credit facilities.

Consider implementing a Control Agreement when your bank is lending against deposit accounts or investment assets in Nigeria. This is especially crucial for large commercial loans where you need extra security beyond traditional collateral. Nigerian banks commonly require these agreements when financing major business expansions, equipment purchases, or working capital facilities.

The agreement becomes vital when dealing with high-value accounts or when multiple lenders are involved. It helps prevent disputes by clearly establishing payment priorities and account access rights. For international transactions, Control Agreements help meet Central Bank of Nigeria requirements while protecting both local and foreign lenders' interests in the secured assets.

• Active Control Agreement: Gives the lender immediate control over the account, requiring their approval for any withdrawals or transfers. Common in high-risk lending scenarios.
• Passive Control Agreement: The borrower maintains day-to-day control until a specific trigger event occurs. Popular with Nigerian banks for routine commercial lending.
• Hybrid Control Agreement: Combines features of both active and passive control, often using transaction thresholds to determine when lender approval is needed.
• Multi-Party Control Agreement: Used when multiple lenders have security interests in the same accounts, establishing clear priorities under Nigerian secured transactions law.

• Commercial Banks: Draft and require Control Agreements as lenders to protect their security interests in borrowers' accounts and financial assets
• Corporate Borrowers: Sign these agreements to access secured financing, often for major business expansions or capital investments
• Custodian Banks: Act as account holders and agreement administrators, managing access rights and implementing control mechanisms
• Legal Counsel: Review and negotiate agreement terms, ensuring compliance with Nigerian banking regulations and secured transactions law
• Company Directors: Authorize the agreements on behalf of borrowing entities, accepting limitations on account access

• Account Details: Gather complete information about all accounts covered, including account numbers, types, and locations
• Party Information: Collect legal names, addresses, and registration details of the lender, borrower, and account-holding bank
• Security Interest: Document the underlying loan agreement and specific assets being secured
• Control Mechanics: Define exactly how and when the lender can take control of accounts
• Authorization Levels: List who can approve transactions and their spending limits
• Notice Requirements: Specify how parties must communicate account changes or control events

• Party Identification: Full legal names and addresses of lender, borrower, and account bank with registration details
• Account Description: Specific details of all controlled accounts, including account numbers and types
• Control Rights: Clear terms outlining when and how the lender can exercise control over accounts
• Notice Provisions: Communication requirements between parties for account changes or events
• Default Triggers: Specific conditions that activate lender's control rights
• Governing Law: Express statement that Nigerian law governs the agreement
• Execution Requirements: Signature blocks for all three parties with corporate seal provisions

A Control Agreement differs significantly from an Account Agreement. While both deal with banking relationships, they serve distinct purposes in Nigerian financial transactions.

• Purpose and Scope: Control Agreements specifically govern lender's rights over secured accounts, while Account Agreements establish the basic relationship between a bank and its customer
• Parties Involved: Control Agreements require three parties (lender, borrower, bank), whereas Account Agreements are typically two-party arrangements between bank and account holder
• Legal Effect: Control Agreements create security interests under Nigerian secured transactions law, while Account Agreements focus on operational terms and service conditions
• Triggering Events: Control Agreements activate specific lender rights upon default, but Account Agreements remain constant throughout the banking relationship