On 25 July 2014, the Parliament of the Republic
of Moldova (Moldova) adopted Act No. 173/2014 on amending and
supplementing of certain legal acts (Act No. 173). Act No. 173 will
enter into force on 8 November 2014 and will inter alia change the
Act No. 449/2001 on pledges (Pledges Act). The effected changes
will have a direct impact on both guarantees issued before the
entrance into force of the Act No. 173 (which will have to be dealt
under the new legal provisions) and on obligations to be secured
under the new legal frame. Act No. 173 is also meant to introduce a
series of novelties into Moldovan legislation.
Some of the novelties are:
Controlled Pledge on Pledgor's Bank
Accounts
Under Art.25¹ of the Pledges Act, a pledgee may benefit from a
pledge over a pledgor's cash in various accounts
(current, deposit, etc.) subject to either the registration into
the Register of Real Guarantees (Register) of such pledge, or the
receipt of a controlled pledge over the pledgor's bank
accounts. The notion of controlled pledge on pledgor's bank
accounts did not exist in the former legislation.
A controlled pledge on bank accounts does not require registration
into the Register and is instituted by one of two means:
1) the pledgee is a local commercial bank and the pledged account
is open with the pledge: in such case, the pledge is effective as
of the moment of execution of the pledge agreement; or
2) the pledgor, the pledgee and the commercial bank in which the
pledgor has its accounts placed enter into a control agreement
(RO contract de control), whereby the pledgee receives
control over the pledgor's cash: in such case, the pledge
becomes effective as of the moment of the entrance into force of
the control agreement.
Unless the control agreement provides otherwise, the pledgor is
still entitled to the use of cash from its pledged bank
account.
Under Moldova's banking secret legislation, local banks are
entitled to deny third parties access to knowing whether a specific
client's bank accounts are under controlled pledge. In
practice, this means that a controlled pledge over bank accounts is
opposable only among the three signatories of the control
agreement.
Register of Pledges Turned Into the Register of Real
Guarantees
With the entry into force of Act No. 173, the former Register of
Pledges will be renamed as the Register of Real Guarantees –
Registrul garanțiilor reale mobiliare (the Register).
Under the Act, all pledges instituted with respect to all movable
goods, except for controlled pledges on bank accounts, are to be
registered into the Register. Furthermore, the Register has been
declared as the only official source of
information regarding guarantees instituted
vis-à-vis all movable goods,
including the ranking of such guarantees. Hence, as of 8 November
2014, pledges over such movable goods as trademarks, shares, and
invention brevets are to be also registered only into the Register.
However, pledges over real estate will continue to be registrable
with local real estate registers.
As previously, the Register will be kept by the Ministry of
Justice, whereas the Government (in a form of a regulation approved
by means of a Governmental Decision) shall regulate its
functioning. Act No. 173 leaves the possibility for the Government
to include new categories of persons with active access (operators)
to the Register. While only notaries have had the right to register
as operators to date, as of 8 November 2014, the Government is
entitled to enlarge the list of persons eligible for being
operators. It remains to be seen whether the local Government will
enlarge the list of eligible operators.
Also, the Act simplifies the application to register a pledge,
which will have to contain:
1) information on the pledgor, the pledgee and the administrator of
the pledge (if one appointed);
2) a general or detailed description of the pledged movable
goods;
3) an interdiction on further pledges (if agreed by the involved
parties);
4) an express specification that the pledge is being instituted
over the entire enterprise (should that be the case);
5) the signatures of the pledgor and the pledgee.
Opposability of Financial Leasing Agreements
With the Act's entry into force, what was previously impossible
will now be possible. The recent amendments to the legislation
grant the right of both the lessor and the lessee to a financial
leasing agreement to register (each separately) their relationship
into the Register (provided that the object of financial leasing is
a movable good).
By general rule, rights vis-à-vis a concrete
movable good – the object of a financial leasing agreement -
become opposable towards third parties as of the moment of
registration of such into the Register.
Foreclosure of Pledges Made Faster
As previously, in case of the foreclosure of a pledge, pledgees are
not entitled to directly enter into the property
over pledged goods (with the exception of cash); however, in the
first instance, they [i.e. pledgees] must enter into goods'
possession (posesiune) and, in the second instance, to
dispose of such goods in favor of third parties.
The novelty introduced by Act No. 173 lies in the fact that, in
addition to the court means to enter into possession of goods
already provided by the former legislation, pledgees are also
entitled to directly request a bailiff to foreclose and pass the
good to the pledgee for further sale. While court formalities shall
no longer be required, such a possibility is subject to the
following conditions:
a) the pledgor expressly consented in the pledge agreement that the
pledgee may enter into the goods' possession without court
intervention; and
b) the pledgee has duly served on the pledgor the notice of
foreclosure (as provided by the law) and registered such notice
into the Register.
Conclusions
At first glance, one may say that the modifications discussed above
were made at the initiative of local commercial banks. Indeed, in
connection with a series of norms, local commercial banks are set
to enjoy an additional comfort with the implementation of these
changes. Still, one should also agree that the changes are oriented
at making the overall sphere of business transactions friendlier
and at reducing the potential for bad-faith actions. At the same
time, the whole process remains quite formal in a series of aspects. It remains to be seen how
the latest changes will be applied in practice, especially by
bailiffs -- who, as practice shows, are not always as transparent
as they should ideally be.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.