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A Control Agreement lets a lender maintain security over a borrower's bank account in South Africa, giving them legal control without actual account ownership. It's commonly used in secured lending transactions when banks or financial institutions need to protect their interests while allowing the borrower to continue normal business operations.

Under South African banking laws, these agreements create a three-way relationship between the lender, borrower, and the account-holding bank. The bank agrees to follow the lender's instructions about the account, especially during default scenarios, while the borrower keeps using the account for daily transactions. This arrangement helps satisfy the legal requirements for perfecting security interests under the Financial Markets Act.

A Control Agreement becomes essential when your company needs financing but wants to keep using its bank accounts normally. South African lenders often require these agreements for larger secured loans, particularly when the borrower's cash flow or account balances serve as collateral. They're especially valuable in trade finance, project funding, and working capital facilities.

Banks typically need Control Agreements when extending credit to businesses with significant cash holdings or regular payment flows. The agreement protects the lender's security interest while letting the borrower continue daily operations. It's particularly useful for manufacturers, retailers, and service companies that need both ongoing account access and substantial credit facilities.

• Direct Control: Standard agreement giving lenders immediate control over account transactions during default
• Springing Control: Allows borrowers full account access until specific trigger events occur
• Hybrid Control: Combines features by setting transaction limits and requiring dual authorization above thresholds
• Multi-Account Control: Covers multiple accounts under one agreement, common in corporate group structures
• Limited Control: Restricts lender control to specific transaction types or amounts while preserving normal business operations

• Lenders/Banks: Draft and require Control Agreements to secure their interests when providing loans or credit facilities
• Account-Holding Banks: Execute agreements and manage compliance with control provisions while maintaining account services
• Borrowing Companies: Sign these agreements to access financing while retaining operational use of their accounts
• Legal Counsel: Review and negotiate agreement terms to protect their clients' interests and ensure regulatory compliance
• Company Directors: Authorize and sign Control Agreements as part of broader financing arrangements
• Financial Officers: Manage day-to-day account operations within the agreement's constraints

• Account Details: Gather complete bank account information, including account numbers and branch codes
• Party Information: Collect legal names, registration numbers, and contact details for all parties
• Security Terms: Define specific control rights, trigger events, and permitted transactions
• Operational Rules: Outline daily transaction limits and authorization procedures
• Default Provisions: Specify actions and rights during default scenarios
• Compliance Check: Verify alignment with South African banking regulations and Financial Markets Act
• Documentation: Our platform generates comprehensive Control Agreements that include all these elements automatically

• Party Identification: Full legal names, registration details, and addresses of lender, borrower, and account bank
• Account Details: Specific account numbers, types, and locations covered by the agreement
• Control Provisions: Clear terms outlining the lender's control rights and operational limitations
• Default Triggers: Defined events that activate enhanced control measures
• Notice Requirements: Communication protocols between parties for instructions and responses
• Operational Terms: Daily transaction limits and authorization procedures
• Governing Law: Explicit reference to South African law and Financial Markets Act compliance
• Termination Clauses: Conditions and procedures for ending the agreement

While Control Agreements and Account Agreements might seem similar, they serve distinctly different purposes in South African banking and finance. Control Agreements focus specifically on securing a lender's interest in a borrower's bank account, while Account Agreements establish the basic relationship between a bank and its customer.

• Purpose and Scope: Control Agreements create a three-way arrangement focused on security interests, while Account Agreements cover general banking services and account operations
• Party Structure: Control Agreements involve three parties (lender, borrower, and bank), whereas Account Agreements are typically between just the bank and account holder
• Legal Effect: Control Agreements grant specific rights to lenders over account access and control, while Account Agreements define standard account terms and customer obligations
• Timing: Control Agreements come into play during financing arrangements, while Account Agreements are needed when first opening any bank account