Article 7 Creation of pledge over financial instrument other than by registration

(1)

Paragraph (2) applies where a constitutive document, or an amendment document, constitutes a security financial collateral arrangement in respect of a financial instrument.

(2)

A pledge is created over the financial instrument on the requirements mentioned in paragraph (3) all being met.

(3)

Those requirements are that—

(a)

the instrument is the property of the provider,

(b)

the instrument is in the possession, or under the control, of the collateral-taker or of a person authorised to act on the collateral-taker’s behalf, and

(c)

the instrument is identifiable as an instrument to which the constitutive document or, as the case may be, amendment document relates.

(4)

If a pledge is created by virtue of paragraph (2)—

(a)

the requirements of section 45(2)(a) (constitutive document) or, as the case may be, 58(1) (amendment of statutory pledge) of the Act as to execution or authentication do not apply, and

(b)

the means by which the pledge may be evidenced include, for example—

(i)

writing transcribed by electronic or other means in a durable medium, or

(ii)

sounds recorded in such a medium.

(5)

This article is subject to section 50 of the Act (creation of statutory pledge: insolvency).