On 11 January 2009, many restrictions on the registered pledge system were removed.
This will undoubtedly lead to more widespread use of the registered pledge system and will also require some adjustment to registered pledge agreements.
Most of the changes are to be welcomed in the current market, even though the ambiguity of some provisions may create uncertainty about their meaning and practical application.
The changes include:
- lifting the restrictions on the entities able to secure receivables by registered pledge
- lifting the restrictions on the appointment of a pledge administrator when a registered pledge is used to secure owing to two or more creditors which only applied when a credit facility or loan was jointly granted
- allowing a pledge administrator to be appointed when a liability is covered by a settlement in bankruptcy or restructuring proceedings
- lifting the requirement that an application to register a pledge must be filed at the pledge register within a month
- allowing a registered pledge to be used to secure two or more contractual liabilities owed to the same creditor
- setting out the requirements for a pledge agreement so that, when the secured liability expires, the pledge register does not
- making registered pledges automatically expire and be removed from the register 20 years after from their registration date, subject a right of the parties to retain them for up to 10 years
- allowing plegdees to take over the subject of a registered pledge not only when the pledge agreement specifies its value but also when it specifies the method of determining its value
- limiting the scope of the court's jurisdiction with regard to the recognition of applications to register a pledge
- setting up an electronic application system for establishing a registered pledge
Law: amendments to the Act on Registered Pledge and the Pledge Register of 6 December 1996
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 14/01/2009.