Law of Security DIFC Law No. 8 of 2005

PART 1: GENERAL........................................................................................................................................................ 1

1. Title....................................................................................................................................................................... 1

2. Legislative authority ............................................................................................................................................. 1

3. Application of the Law .......................................................................................................................................... 1

4. Dates of enactment and commencement.............................................................................................................. 1

5. Interpretation........................................................................................................................................................ 1

6. Administration of the Law..................................................................................................................................... 1

PART 2: THE APPOINTMENT OF AND ROLE OF REGISTRAR/SCOPE.................................................................................. 2

7. Appointment of the Registrar................................................................................................................................ 2

8. The functions of the Registrar............................................................................................................................... 2

9. Scope..................................................................................................................................................................... 3

PART 3: ATTACHMENT AND EFFECTIVENESS OF SECURITY INTERESTS; COLLATERAL ..................................................... 5

10 Effectiveness of security agreement .................................................................................................................. 5

11. Attachment and enforceability of security interests in collateral, proceeds and supporting obligations......... 5

12. Title to collateral immaterial............................................................................................................................... 6

13. After-acquired collateral and future advances .................................................................................................. 6

14. Use or disposal of collateral................................................................................................................................ 6

15. Duties of secured party having control of collateral to terminate control.......................................................... 7

16. Duties of secured party to release account debtor notified of assignment....................................................... 7

PART 4: PERFECTION AND PRIORITY............................................................................................................................. 7

CHAPTER 1 - PERFECTION .......................................................................................................................................... 7

17. Perfection of security interests and scope of perfection................................................................................... 7

18. When filing required to perfect security interest ............................................................................................... 7

19. Security interest perfected upon attachment .................................................................................................... 8

20. Continuing of perfection...................................................................................................................................... 8

21. Temporary perfection without filing or control ................................................................................................... 8

22. Perfection by filing and control .......................................................................................................................... 9

23. Secured party's rights on disposal of collateral and in proceeds....................................................................... 9

CHAPTER 2 - PRIORITY.............................................................. ................................................................................10

24. Interests that take priority over or take free of security interest .................................................................... 10

25. Priorities among conflicting security interests in same collateral................ ...................................................10

26. Priority of security interests in transferred collateral....................................................................................... 10

27. Priority of security interests created by new debtor......................................................................................... 10

28. Priority of security interests in deposit account .............................................................................................. 11

29. Priority of security interests in financial property ............................................................................................ 11

30. Priority of purchaser of a negotiable document or negotiable instrument ............ ..........................................11

31. Transfer of money.............................................................................................................................................. 12

32. Priority of security interest perfected by filed financing statement providing certain incorrect information ..12

33. Priority subject to subordination............................................ ...........................................................................12

PART 5: RIGHTS OF THIRD PARTIES............................................................................................................................ 12

34. Alienability of debtor's rights............................................................................................................................ 12

35. Secured party not liable for debtor.................................................................................................................... 12

PART 6: THE SECURITY REGISTRY AND FILING............................................................................................................. 13

36. Security Registry........................................................................ ........................................................................13

37. Effect of certain events on effectiveness of financing statement................................................................... 13

38. Effectiveness of financing statement if new debtor becomes bound by security agreement.......................... 13

39. Persons entitled to file a record........................................................................................................................ 14

40. Amendment of financing statement ....................................... ..........................................................................14

41. Termination statement ..................................................................................................................................... 14

42. Duration and effectiveness of financing statement; effect of lapsed financing statement ....... ....................15

43. Refusal to accept record................................................................................................................................... 15

44. Regulations ........................................................................................ ..............................................................15

45. Requests for accounts, lists of collateral or statement of account................................................................. 16

PART 7: DEFAULT AND ENFORCEMENT ....................................................................................................................... 18

CHAPTER 1 - RIGHTS ON DEFAULT .................................................. ..........................................................................18

46. Rights after default........................................................................................................................................... 18

47. Waiver and variance of rights and duties.......................................................................................................... 18

CHAPTER 2 - COLLECTION AND ENFORCEMENT................................... ........................................................................18

48. Collection and enforcement by secured party............................................... ....................................................18

49. Application of proceeds of collection or enforcement................................. .....................................................19

CHAPTER 3 - DISPOSAL OF COLLATERAL ................................................................................................................... 20

50. Secured party's right to take possession after default ................................... .................................................20

51. Disposal of collateral after default.................................................................................................................... 20

52. Notification before disposal of collateral.................................................. ........................................................21

53. Application of proceeds of disposal of collateral.............................................................................................. 21

54. Rights of transferee of collateral...................................................................................................................... 22

55. Assignments, transfers or subrogation not to constitute disposal ................................................................. 22

CHAPTER 4 - ACCEPTANCE OF COLLATERAL........................................... ....................................................................23

56. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposal of collateral ........ 23

57. Notification of proposal to accept collateral ................................................................................................... 23

58. Effect of acceptance of collateral..................................................... ...............................................................23

59. Right to redeem collateral............................................................ ....................................................................23

60. Remedies for secured party's failure to comply with Law................................................................................ 24

SCHEDULE 1............................................................................................................................................................ 25