(c ) Colloquium on Reform of Secured transactions Law the draft UNCITRAL Legislative Guide on Secured Transactions (Clermont Ferrand, France 23 April 2004)

Subject to the limitations discussed in the following paragraph, the secured transactions law would apply to security interests in intellectual property rights.

Recommendations of the draft legislative guide on secured transactions

(cc) Bank account means, subject to law other than secured transactions law, an account maintained by a bank into which funds may be deposited.

These transactions are essentially non possessory security rights, and they are primarily used in States where the secured transactions law has not yet appropriately recognized non possessory security rights.

(b) The record of the registry is centralized that is, it contains all notices of security rights registered under the secured transactions law of the enacting State

K. Harmonize secured transactions laws, including conflict of laws rules

(dd) Intellectual property right includes, subject to law other than the secured transactions law, patents, trademarks, service marks, trade secrets, copyright and related rights and designs.

Security rights in such assets are not excluded but, in the case of any inconsistency between such a special law and secured transactions law, the special law (e.g. the special registration system) prevails.

(w) Negotiable instrument means, subject to law other than secured transactions law, an instrument that embodies a right to payment, such as a promissory note or a bill of exchange, which satisfies the requirements for negotiability under the law governing negotiable instruments.

These requirements are contained within the FTR Act.

(x) Negotiable document means, subject to law other than secured transactions law, a document that embodies a right for delivery of tangibles, such as a warehouse receipt or a bill of lading, which satisfies the requirements for negotiability under the law governing negotiable documents.

In this regard, the Guide adopts two of the most essential concepts of successful secured transactions laws, the concepts of priority and effectiveness against third parties.

(dd) Consultations with German Ministry of Justice on the draft Legislative Guide on Secured Transactions (Berlin, Germany 15 November 2004)

A legal system that supports secured credit transactions is critical to reducing the perceived risks of credit transactions and promoting the availability of secured credit.

This requirement is set out in section 15 of the FTR Act.

Set forth below are short examples of the types of secured credit transactions that the Guide is designed to encourage, and to which reference will be made throughout the Guide to illustrate specific points.

These examples represent only a few of the numerous forms of secured credit transactions currently in use, and an effective secured transactions regime must be sufficiently flexible to accommodate many existing methods of financing, as well as methods that may evolve in the future.

At that session, the Commission agreed that secured credit law was an important subject and had been brought to the attention of the Commission at the right time, in particular in view of its close link with the work of the Commission on insolvency law.

In the Netherlands the Money Transaction Offices Act requires money transfer companies to be registered with the Dutch Central Bank.

The Commission's decision to undertake work in the area of secured credit law was taken in response to the need for an efficient legal regime that would remove legal obstacles to secured credit and could thus have a beneficial impact on the availability and the cost of credit.

The High Court applied in its judgment the Singapore Electronic Transactions Act (ETA), which adopts the UNCITRAL Model Law on Electronic Commerce (MLEC).

A Bill to amend the Financial Transactions Reporting Act to include the FATF Revised Forty Recommendations is before Parliament.

Adoption of legislation based on the recommendations contained in the Guide will result in harmonization of secured transactions laws (through the adoption of similar substantive laws which will facilitate the cross border recognition of security rights).

Furthermore, to the extent complete harmonization of national secured transactions laws might not be achieved, conflict rules would be particularly useful to facilitate cross border transactions.

At the same time, the Guide takes into account that other legislation may protect the legitimate interests of consumers or other persons and specifies that a secured transactions regime should not override such legislation.

A key to a successful legal regime governing secured transactions is to enable a broad array of businesses to utilize the full value inherent in their assets to obtain credit in a broad array of credit transactions.

Valuation of secured claims

Under section 17B of the FTR Act, all international funds transfer instructions (IFTIs) sent into and out of the country are reported to AUSTRAC.

Reference was also made to the need to coordinate with the Hague Conference with respect to the conflict of laws chapter of the draft legislative guide on secured transactions, in particular with respect to the law applicable to the enforcement of security rights in the case of insolvency.

Note to the Working Group The insolvency chapter will need to address other terms used in the Insolvency Guide and the Secured Transactions Guide the definition of security interest and security right , for example, differ in the two texts.

To best promote the availability of low cost secured credit, the Guide suggests that secured transactions laws should be structured to enable businesses to utilize the value inherent in their property to the maximum extent possible to obtain credit.

At its thirty third session (2000), the Commission discussed a report prepared by the Secretariat on issues to be addressed in the area of secured credit law (A CN.9 475).

The Decree designating liberal professions under the Compulsory Identity Act and the Disclosure of Unusual Transactions Act came into force on 1 June 2003.

However, the holder of a CDO or MBS would be unable to take these homeowners to court. And even if he succeeded, homeowners could simply return their house keys, as they, too, enjoy the protection of non recourse.

The concept of effectiveness against third parties, in the form of a system allowing, inter alia, the registration of a notice concerning security rights, is designed to promote legal certainty with regard to the relative priority status of creditors and thus to reduce the risks and costs associated with secured transactions.

(d) Simplification of the administration of transaction and lower transaction costs.

The Commission endorsed a suggestion made to revise the insolvency chapter of the draft legislative guide on secured transactions in light of the core principles agreed by Working Groups V and VI (see A CN.9 511, paras. 126 127 and A CN.9 512, para.

The Working Group, which is preparing a draft legislative guide on secured transactions, has held until the thirty eighth session of the Commission, in 2005, seven one week sessions during which it considered draft chapters of the legislative guide prepared by the Secretariat.

Because healthy competition among all potential creditors is an effective way of reducing the cost of credit, the Guide recommends that the secured transactions regime apply equally to various creditors, including banks and other financial institutions, as well as domestic and non domestic creditors.

Commercial transactions

The Netherlands' second report states (at page 4) that informal banking networks are prohibited in the Netherlands unless registered under the Money Transaction Offices Act.

The Guide also recommends that there be a close coordination between a State's secured transactions laws and its insolvency laws with a view to respecting the pre insolvency effectiveness and priority, as well as the economic value, of a security right subject to the appropriate rules of insolvency law.

In conjunction with that session, an informal presentation was made of the recently completed secured transactions law in the Slovak Republic, which was supported by the World Bank and by EBRD.

The main conditions for success of decentralization include secure tenure and secure fiscal, revenue and taxation power, as well as control over decision making, resources, products and markets.