Trustees and trust assets In many respects, taking security from trustees over trust assets is similar to taking security from chargors who own the relevant asset outright. Considerations which would apply when taking security from an individual will also apply when taking security from individual trustees and the same for their corporate equivalents. This Practice Note does not seek to cover areas and issues which are of general application when taking security but rather focuses on those particular points to bear in mind when taking security over trust assets. This Practice Note covers the following matters: • the nature of trusts • the powers of trustees to borrow and grant security • particular issues to consider where security is taken over land • regulatory aspects, and • documentary considerations Please note that this Practice Note considers issues relating to the taking of security from trustees generally and not charity trustees. For a consideration of issues relevant to charity trustees, see Practice Note: Mortgages by charity trustees. Before looking at specific points

Lenders take security in aircraft finance transactions as a means of credit-enhancement to improve the likelihood that their loan will be repaid in full if the borrower becomes insolvent or defaults on its payments. Important considerations for lenders taking security are: • the validity and enforceability of their security wherever the aircraft is located at the relevant time • the security ranking in priority to the borrower’s other creditors and the aircraft being ring-fenced for the benefit of the secured lender, and • the assets subject to the security not being subject to claw-back in any insolvency proceedings of the borrower Another reason why lenders take security over aircraft is that the Basel framework (which is implemented by the EU Capital Requirements Regulation (Regulation (EU) 575/2013) (EU CRR)) requires banks to which it is subject to have legally effective and enforceable security over the aircraft in all relevant jurisdictions if they wish to use that security to reduce the risk weighting of any loan (and so the capital adequacy costs

Cash is commonly offered as security for a loan. In commercial lending transactions cash may be offered as security: • as part of a package of security over the whole of a company's assets • in transactions where the borrower is required to reserve certain amounts of cash for specific purposes (eg in a mandatory prepayment account in acquisition finance, a rent account in real estate finance or a blocked collection account in receivables finance transactions) • in transactions involving a special purpose company where the lender wants to control the flow of cash through the business (eg in project finance) • in derivatives transactions, cash posted to central counterparties as financial collateral to cover exposures to their members, and/or • as cash cover for a bank guarantee or collateral for a letter of credit This Practice Note explains the key issues that arise when taking security over cash deposits in a bank account. The bank account could be with the lender or it could be with a third party

This Practice Note outlines some key considerations relating to the granting of security over charity assets. It will provide a brief overview of: • the legal and non-legal structures that a charity may take • taking security over land held by a charity • negotiation and drafting points • practical considerations, and • registration and enforcement of security Structures for charities The word ‘charity’ does not denote a particular legal form or structure: it is a legal status which can be applied to a wide range of organisations. Charities may grant security in different ways, depending on their constitutional structure (and in particular whether they are incorporated (and therefore have legal personality) or unincorporated). If you are unsure about the structure of the charity, a search of the Register of Charities on the Charity Commission website should be able to confirm its legal form. You can also see whether a charity is a charitable company registered at Companies House by searching for the name of

This Practice Note deals with taking security over contractual rights in general. It explains: • typical methods of taking security over contractual rights • key provisions to check in the contract which is to be assigned, including governing law, restrictions on assignment and contractual rights of set-off • key terms to be included in the security document • issues relating to serving notice of the security on the contract counterparty, and • perfection and priority issues Detailed information on assignments by way of security, including the differences between statutory and equitable assignments and the reasons for serving notice, is contained in Practice Note: Assignments by way of security. What are contractual rights and when is security taken over them? What is meant by contractual rights? Rights under contracts are intangible assets rather than tangible assets such as goods or land. They are what is known as a chose in action, meaning that they are recoverable by legal action. Contractual rights can include: • rights to payment of debts (known as receivables), including book debts

Goods can vary from large, high-value items such as ships and aircraft to stock in trade. How lenders take security over goods from a corporate chargor will depend on many factors. This Practice Note explains: • what we mean by 'goods' • which type of security is appropriate for different types of goods, and • whether there are any perfection requirements relating to taking security over goods It does not deal with taking security over personal chattels (ie taking security over goods from individuals). For information on taking security from individuals, see Practice Note: Key issues in taking security from individuals. What we mean by 'goods' Tangible assets Goods are tangible assets, as opposed to intangible assets such as intellectual property (see Practice Note: Taking security over intellectual property rights) and contractual rights (see Practice Note: Taking security over contractual rights). In the context of a corporate chargor, 'goods' include: • large pieces of equipment such as plant and machinery • small pieces of equipment such as office furniture, computers etc, and • stock in

Rights under insurance policies are a type of contractual right. Lenders can take security over insurance policies by an assignment by way of security. There are also additional protections that a lender can utilise in relation to insurances, such as having its interest noted on a policy of insurance or being co-insured. These additional protections take different forms and have different benefits for a lender. This Practice Note will focus on issues relevant to taking security over rights under insurance policies. For information on how to take security over contractual rights in general, see Practice Note: Taking security over contractual rights. Nature of insurance policies Rights under insurance policies are not tangible assets. They are a type of contractual right. A contractual right is what is known as a chose in action or thing in action, ie something that is recoverable by legal action as opposed to something that is physically possessed. Contracts of insurance are a special kind of contract. They are contracts of the utmost good faith, which means that the insured

Scope of this Practice Note A company's IP rights can be offered as security for a loan. In commercial lending transactions, IP rights are commonly offered as security for a loan: • as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures) • in transactions that involve lending to a borrower in an industry where IP rights are particularly valuable, for example: ◦ biotechnology, pharmaceutical, electronics and telecommunications industries (where patents are particularly key) ◦ global retail industries (where trade marks are particularly key), or ◦ film production and software manufacturing industries (where copyright is particularly key) This Practice Note does not cover taking security over IP rights in the EU or other overseas jurisdictions. Lenders should seek appropriate local law advice when taking security over a multi-jurisdictional IP portfolio. However, we address below the impact of Brexit on security over IP rights registered in the EU before IP completion day, as action may need to

Introduction It is increasingly recognised that all businesses own and use IP of some kind. Lenders in sectors which include IP-rich businesses are focusing increasingly on ensuring that their security captures the value of this IP. The EU Intellectual Property Office (EUIPO) and the European Investment Fund (EIF) signed a memorandum of understanding to promote IP-backed financing opportunities for small and medium enterprises and innovators in May 2026. See: LNB News 08/05/2026 14. The law relating to security over IP is uncertain, and lenders must manage their way through the uncertainty. In addition, security over IP rights may be costly to put in place and difficult to enforce. A lender must first identify and value its borrower’s IP. It will distinguish between types of IP, for example IP with proprietary qualities and IP comprised in contractual rights. It will recognise that IP within a business is usually interrelated,

Scope of this Practice Note Land (or real property) is commonly offered as security for a loan. In this context, land has more relevance than some other assets because it can be used in personal lending transactions (eg home purchases) as much as commercial lending transactions. In commercial lending transactions, land is particularly commonly offered as security: • as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures) • in property finance (where land is acquired as an investment or bought for the purposes of development—see Practice Note: Security in real estate finance transactions), and • in project finance (where the project site usually represents a significant proportion of the borrower's assets—see Practice Note: Security in project finance transactions) This Practice Note explains the key issues that arise when taking security over land located in England or Wales and covers: • the types of security that can be created over land • how to create a legal mortgage over land • how to create

This Practice Note seeks to highlight the key differences between the laws of Scotland and England relating to the creation of fixed security over land and buildings. These range from the form of security which it is possible to create over real estate, to how such security can be perfected and the importance of such perfection requirements. For more information on taking security over land in general and, in particular, the position in England and Wales, see Practice Note: Taking security over land. Land and buildings A good starting point for this Practice Note is to examine what constitutes land and buildings for the purposes of taking fixed security. Under Scots law it is possible to take a fixed security in the form of a standard security over property which is owned outright (heritable property) or which is leased for a period of time (leasehold). In relation to leasehold property it is not possible to register at the Land Register of Scotland or the General Register of Sasines

In commercial lending transactions receivables are typically offered as security: • as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures), and • in transactions where a steady stream of receivables forms a major part of the borrower's assets and the lender wants to control that income stream (for example, where the borrower is a company which provides goods and services to third parties) This Practice Note explains the key issues which arise when taking security over receivables. For information on taking security over other types of intangible assets see Practice Notes: • Taking security over insurance policies, and • Taking security over intellectual property rights This Practice Note focuses on receivables, but more general information on taking security over contractual rights can be found in Practice Note: Taking security over contractual rights. For specific information on receivables financings, see Practice Note: Invoice discounting and factoring. Nature of receivables In broad terms, a receivable is the right to receive the payment