For secured creditors, control of securities mortgaged by the new priority rules is essential. In all but a few cases, registration alone will not be sufficient to obtain and maintain priority over other creditors. Under the new regime: (i) a controlling secured creditor has priority over a secured creditor who registers only against the pawnbroker; (ii) a secured creditor who obtains the first control has priority over a secured creditor, who then obtains control; and (iii) the securities intermediary itself (which, in many circumstances, is considered a supervisory authority) has priority over secured creditors. As can be inferred from the new priority rules, control is not necessarily an exclusive regime. For certain types of real estate assets, such as accounting securities. B, more than one secured creditor (as well as the securities intermediary) may have control of the same securities. In essence, control means that the secured creditor has the right to assign “attribution orders” to the securities intermediary in certain circumstances (for example. B in the event of a late payment by the borrower/pledgee) and the securities intermediary agreed that it would comply with these instructions from the secured creditor without further approval from the borrower/pledgor. An authorization warrant is the ATS`s terminology for an order assigned to a securities brokerage that orders it to transfer or execute a security or security claim. The borrower/Pledgor is prevented from giving instructions to the contrary and the securities intermediary may accept them. As new provincial legal requirements come into play, lenders need to reassess their approach when taking guarantees on stocks and other securities, and borrowers and their CHCs need to understand how they can respond to new demands and considerations.

In Ontario, the Securities Transfer Act (Ontario) (the “STA”) and related amendments to the Personal Property Security Act (Ontario) (PPSA) are now in effect. The control agreement does not replace a guarantee agreement that continues to be concluded separately between the insured lender/party and the borrower/creditor, in order to grant the necessary security shares on the securities. On the contrary, the control agreement is a method of enhancing security interests and, in its most fundamental form, a contract between a secured creditor, a pfandgor and the securities intermediary of the loan, in which the intermediary gives the secured creditor the “control” of the pawned securities.