Does the law in your jurisdiction allow security and guarantees to be held on trust by a security trustee for the benefit of the banking syndicate? Austria DORDA

Austrian law does not recognise the concept of ‘security trustees’. Where security is governed by Austrian law, specific formalities must be observed in order to ensure the validity of the security. An accessory security interest (eg, a surety or pledge) cannot be separated from the underlying loan or the security interest will be extinguished (the same applies in cases of novation). A security trustee can hold accessory security only for his or her share of the loan. It is therefore market practice to include a parallel debt structure for the security trustee concerning security governed by Austrian law. In order not to breach the principle of accessory, a security trustee will have a parallel claim in the entire loan, so that he or she can enforce the security interest for the full amount (and not only his or her part of the claim).

For non-accessory security interests (eg, guarantees), the above is not applicable. As non-accessory and therefore abstract security interests are legally not connected to the loan, a security trustee could hold this kind of security interest without a parallel debt claim, if agreed in the documentation. However, as most loan facilities include accessory and abstract security interests, a parallel debt claim will still be necessary.

Dominican Republic Guzmán Ariza

Yes – this has been allowed since the enactment of the Trust Law in 2011.

Italy Willkie Farr & Gallagher LLP

Trusts are not regulated under Italian law, but trusts governed by a foreign law should be recognised by the Italian courts in accordance with the Hague Convention 1985. Trustees can be either Italian resident entities or foreign entities operating in Italy. Both have fiduciary duties governed by the foreign law applicable to the trust. However, the agent concept is recognised under Italian law so that in syndicated loans governed by Italian law, a bank commonly acts as an agent for the other lenders instead of acting as trustee.

New Zealand Buddle Findlay

New Zealand law allows for security and guarantees to be held on trust for the benefit of a banking syndicate.

Peru Miranda & Amado Abogados


Romania Volciuc-Ionescu SCA

Romanian law recently recognised a concept similar to a trust – the fiducia. Unfortunately, the creation of a fiducia is onerous (involving special forms and various registrations and raising certain tax issues) and, as such, it has rarely been used in practice for taking security. Thus, in syndicated facilities security agents are more common than security trustees. 

United Kingdom Ashurst LLP

Yes. In contrast to other jurisdictions in continental Europe, in England and Wales the concept of the trust is recognised. Security is typically granted in favour of a security trustee, who holds the security on trust for the specified secured parties from time to time.

USA Sullivan & Cromwell LLP

In the United States, the security is effectively held in trust by the collateral agent for the benefit of the secured parties. The collateral documentation refers to the collateral agent and the collateral agent performs ministerial functions relating to the collateral. Guarantees are typically in favour of the collateral agent on behalf of the secured parties.  

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