Article 16 Mortgage of Securities
The mortgage of securities in favour of the mortgagor shall be effected in accordance with the following procedures:
1. The mortgagee shall deliver a formal letter to the Exchange with a copy to the issuer of the securities, which states the following:
(a) Name of the owner — mortgagor.
(b) Name of the issuer and number of mortgaged securities.
(c) Mortgage term.
(d) Date of commencement of the mortgage.
2. The following documents shall be attached to the letter:
(a) The original shares certificate (if not previously delivered).
(b) True copy of the mortgage contract signed by the mortgagor and mortgagee.
3. Payment of the mortgage entry charge, in accordance with Appendix (1).
4. The Exchange shall open a special register for the mortgaged securities, so as not to allow the mortgagor to dispose thereof, without the consent of the mortgagee.
5. If the securities are registered in the electronic clearing system, the Exchange shall send a letter to confirm the mortgage to the mortgagee within 48 hours from the date of receipt of the mortgage letter. However, where the deposited securities are not registered in the electronic clearing system, the mortgage shall be confirmed by withdrawal of the deposited securities and notifying the relevant registrar in writing.
6. Where the mortgagor and mortgagee agree to dispose of the mortgaged securities by sale at the Exchange, the mortgagee shall send a formal letter to the Exchange using the Release of Mortgage Form No. (9) to convey the wish of the two parties to transfer the mortgaged securities to the investor's account with the relevant broker. The Exchange shall transfer such securities to the investor's account with the relevant broker within 48 hours from the date of receipt of the application.
7. The mortgagee shall issue a sale order to the agreed broker who shall sell the securities and transfer the proceeds to the agreed account within a maximum of 4 days from the date of the transaction.
8. The Exchange shall instruct the broker in writing to transfer the proceeds of the sale of the securities to the account determined by the two parties.
9. In the event of issue or distribution of rights or benefit pertaining to the mortgaged securities, such right shall be treated according to the agreement of the parties, as stated in the mortgage contract and the Mortgage Entry Application Form No. (8).
10. In the event of release of the mortgage, the mortgagee shall notify the Exchange in writing with a copy of the Registrar of securities, with respect to the companies who maintain their registers.