Security Trust Agreement Template for India

The Security Trust Agreement is a critical document in Indian financing transactions where security interests need to be held and managed for multiple beneficiaries. It is particularly relevant in scenarios involving syndicated loans, debenture issuances, or other complex financing arrangements where having each lender as a direct security holder would be impractical. The agreement establishes a trust structure compliant with Indian law, particularly the Indian Trusts Act 1882, where a designated security trustee holds and manages security interests on behalf of beneficiaries. This arrangement simplifies security creation, management, and enforcement, while also facilitating transfers of lending interests without requiring changes to security documentation. The document addresses crucial aspects such as the trustee's powers and duties, enforcement mechanisms, trust property administration, and beneficiary rights, making it essential for structured financing transactions in India.

1. Parties: Identification of the Security Trustee, Settlor/Security Provider, and Beneficiaries (typically the lenders/debenture holders)

2. Background: Context of the transaction, reference to primary facility/debenture agreements, and purpose of the security trust arrangement

3. Definitions and Interpretation: Definitions of key terms, interpretation rules, and references to defined terms in related documents

4. Declaration of Trust: Formal creation of the trust, specification of trust property, and beneficiaries' interests

5. Security Trustee Appointment: Terms of appointment, acceptance, and general powers of the Security Trustee

6. Powers and Duties of Security Trustee: Detailed powers, responsibilities, and limitations of the Security Trustee's authority

7. Security: Description of security assets, creation, perfection, and maintenance of security

8. Enforcement: Circumstances and process for enforcement of security, distribution of proceeds

9. Trustee Protections: Limitations of liability, indemnities, and protections for the Security Trustee

10. Remuneration: Fees, costs, and expenses of the Security Trustee and their payment

11. Resignation and Replacement: Process for resignation, removal, and appointment of new Security Trustee

12. Amendments and Termination: Procedures for modifying the agreement and circumstances for termination

13. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes