Commentary on Sections Part 2 – Security over Moveable Property Statutory pledge Section 45 – Constitutive document
209.This section is the first of a number of sections that make provision for a statutory pledge. This type of pledge does not require delivery of the encumbered property, and is therefore a non-possessory pledge.
210.Subsection (1) provides that a statutory pledge must have a constitutive document, so that it is not competent to grant an oral non-possessory pledge. There is no equivalent rule for a possessory pledge as a security of that type is created by delivery of the encumbered property.
211.Subsection (2)(a) requires that the constitutive document is subscribed by the provider using a physical signature (“executed”) or signed electronically (“authenticated”). Section 120(2) of the Act defines “executed” and “authenticated” for that purpose.
212.Subsection (2)(b) sets out that the document must also identify the encumbered property. As a result of subsection (3), this may be done by reference to an identifiable class of property (for example, “my computers”), or by reference to a description in another document.
213.Where property is identified by reference to a class of property, the Act’s information rights will be particularly relevant. An entitled person, as defined in section 107(2) of the Act, is able to obtain from the secured creditor further information about the encumbered property by making a request to that effect under that section.
214.Subsection (2)(c) requires the secured obligation to be identified.
215.Subsection (4) makes it clear that a statutory pledge may be granted over property not owned by the provider at the time the property is identified in the document. This subsection should be read with section 48 of the Act which has the effect that the pledge is not created until (and if) the property becomes the provider’s property.
216.Subsection (5) makes it clear that the rules about identifying encumbered property and secured obligations can be satisfied by cross-referring to another document (see paragraph 9 of these Notes for a discussion of the term “document”).