With the increasing implementation of the UNCITRAL Model Law on Cross Border Insolvency¹, one of the most important jurisdictions in which to take security is the jurisdiction of a grantor’s centre of main interests (COMI).

Briefly, COMI is an idea in cross-border insolvency law which places emphasis on the jurisdiction in which
a grantor has its head-office functions. The idea of COMI has become necessary because of international commerce – there are an increasing number of cases where companies are incorporated in one jurisdiction (for example, Australia), but grow rapidly overseas and end up owning more assets and operations overseas than in their jurisdiction of incorporation.

The COMI of a company with international assets and operations is not necessarily the jurisdiction of its incorporation. Rather, it is the jurisdiction in which the company’s principal operations, assets and head office function is located, and accordingly the jurisdiction where most of the grantor’s creditors are located. The jurisdiction of a grantor's COMI could be entirely different fro its jurisdiction of incorporation.

The jurisdiction of the COMI of a grantor is significant because it will determine where main insolvency proceedings can be opened for a grantor, which main proceedings can then be recognised in other countries that have implemented the Model Law to facilitate the efficient insolvency administration of the grantor’s assets and affairs.

It is very important for creditors to hold security not only in the jurisdiction of incorporation of a grantor and the locations of the grantor’s assets, but also in the jurisdiction where a grantor’s COMI is located (if different).

For further discussion on the Model Law, COMI and related security and cross-border insolvency issues, see Lionel Meehan, Cross border insolvency law: reform and recent developments in light of the recent JAL corporate reorganisation filing (2011) 22 Journal of Banking and Finance Law and Practice 40