Third party security interests
Account Holders can authorise a third party to create a security interest over their New Zealand Units.
A third party security interest is a type of interest created over assets to secure the performance of an obligation. The obligation is usually the payment of a debt by either an individual or a Company.
As part of the Personal Property Securities Act 1999, an Account Holder in the New Zealand Emission Trading Register (the Register), may authorise a third party to create a security interest over New Zealand Units (NZUs) held in their holding account. A security interest can only be set up where there is at least one NZU in the affected holding account.
The third party, known as the Third Party Possessor (TPP) must register as a user in the Register and once registration is complete, they will receive an invite code which they can pass to the Account Holder. The Account Holder will then initiate a process to register the third party security interest on their account via the Register.
Once registration is complete, the TPP will be able to know the balance of the Holding Account, however they will not be able to undertake transactions or have any additional access to the account.
What does this mean for Account Holders?
A block is placed on the account so that no units may be traded out of it without firstly getting the consent from the TPP. The block can be placed on all the units held or a partial amount of units within the account.
If the Account Holder needs to transfer units out of the account, the TPP will have to consent to a temporary suspension of the block to enable the transfer to take place. Once the transaction has taken place they will reinstate the block.
This does not affect any lodgements of units into the account, but units lodged may become subject to the security interest depending on the type of block that was set up on the account.