Law on Pledge of Movable Assets for Commercial Transactions (the Movable Pledge Law), regulating ... more Law on Pledge of Movable Assets for Commercial Transactions (the Movable Pledge Law), regulating the pledge of certain movables, which are enumerated under Article 5 of the Movable Pledge Law entered into force on 1 January 2017. According to the Movable Pledge Law, the pledged movable(s) need not be delivered to the pledgee for perfection of the pledge. One of the most important alterations to the previous legislation can be considered the fact that, after entry into force of the Movable Pledge Law, commercial enterprise pledge is to be established according to Movable Pledge Law (and not according to Commercial Enterprise Pledge Law numbered 1447 (the CEP Law), which is abolished by the entry into force of the Movable Pledge Law). As per Movable Pledge Law, the commercial enterprise pledge will comprise all machinery, tools, equipment and transportation vehicles in a commercial enterprise which are necessary for, and physically allocated to, the ongoing operations of the enterprise and, also, the commercial title of the pledgor and the name of the commercial enterprise. Furthermore, the commercial enterprise pledge may also include, depending on the agreement of the parties, future movable assets of the commercial enterprise. According to the Movable Pledge Law, a movable pledge agreement can be executed by and between (i) Turkish banks, financial leasing companies, factoring companies and Turkish public institutions that are authorized to lend or provide guarantees, merchants, craftsmen, farmers, producer organizations, self-employed individuals and legal entities acting as lenders; or (ii) merchants and/or craftsmen. Under the Movable Pledge Law, a merchant is any individual or legal entity that carries out commercial operations through a commercial enterprise. Therefore, legal entities established and operating abroad would also be considered merchants to the extent that they carry out commercial operations through a commercial enterprise. It is important to note that the CEP Law allowed commercial enterprise pledge to be established in favour of: (i) financial institutions authorised to grant loans; (ii) real persons or legal entities engaging in a credit sale; or (iii) cooperatives (kooperatifler). Article 5 of the Movable Pledge Law sets out the movables which can be pledged as per the Movable Pledge Law in a numerus clausus manner. This extended list of aforementioned items contains receivables, perennial plants, intellectual and industrial property rights, raw materials, animals, all kinds of earnings and revenues, all kinds of licences and permits, rental incomes, tenancy rights, all kinds of movable enterprise installation including machinery and equipment, consumable materials, stocks, agricultural products, trade name and company name, commercial licence plate and commercial line licence, commercial project, and wagons and railcards. In addition, these items can be also pledged even though a third party has the possession of the item subject to the pledge. However, the Movable Pledge Law expressly stipulates that it shall not apply to account pledges and pledges of which the subject matter is financial agreements pertaining to capital markets instruments and derivative financial instruments. The Movable Pledge Law defines the financial agreements as spot, future, forward, option or swap transactions which are based on financial instruments such as interest rate, merchandises, foreign currency, share certificates, bill of exchange, index, etc., repo and reverse repo transactions, any transactions similar to the above including other transactions used in financial markets and agreements containing any kind of combination of such transactions. Interpreting the wording of the Movable Pledge Law, we understand that share pledge will not be able to be established as per the Movable Pledge Law. However, we expect that the scope of the Movable Pledge Law will be further clarified by further secondary legislation or market practice offering more guidance on the matter. According to the Movable Pledge Law, the pledge over the movable will be perfected by registration of the pledge agreement with the Pledged Movables Registry. In order for the pledge agreement to be registered with the Pledged Movables Registry, the pledge agreement should be either (i) prepared in an electronic medium (electronic platform of the Pledged Movables Registry) and printed by a notary public, signed by the parties, followed by the certification of the signatures of the parties before the notary public; or (ii) the agreement should be executed ex officio before the official of the Pledged Movables Registry.
Law on Pledge of Movable Assets for Commercial Transactions (the Movable Pledge Law), regulating ... more Law on Pledge of Movable Assets for Commercial Transactions (the Movable Pledge Law), regulating the pledge of certain movables, which are enumerated under Article 5 of the Movable Pledge Law entered into force on 1 January 2017. According to the Movable Pledge Law, the pledged movable(s) need not be delivered to the pledgee for perfection of the pledge. One of the most important alterations to the previous legislation can be considered the fact that, after entry into force of the Movable Pledge Law, commercial enterprise pledge is to be established according to Movable Pledge Law (and not according to Commercial Enterprise Pledge Law numbered 1447 (the CEP Law), which is abolished by the entry into force of the Movable Pledge Law). As per Movable Pledge Law, the commercial enterprise pledge will comprise all machinery, tools, equipment and transportation vehicles in a commercial enterprise which are necessary for, and physically allocated to, the ongoing operations of the enterprise and, also, the commercial title of the pledgor and the name of the commercial enterprise. Furthermore, the commercial enterprise pledge may also include, depending on the agreement of the parties, future movable assets of the commercial enterprise. According to the Movable Pledge Law, a movable pledge agreement can be executed by and between (i) Turkish banks, financial leasing companies, factoring companies and Turkish public institutions that are authorized to lend or provide guarantees, merchants, craftsmen, farmers, producer organizations, self-employed individuals and legal entities acting as lenders; or (ii) merchants and/or craftsmen. Under the Movable Pledge Law, a merchant is any individual or legal entity that carries out commercial operations through a commercial enterprise. Therefore, legal entities established and operating abroad would also be considered merchants to the extent that they carry out commercial operations through a commercial enterprise. It is important to note that the CEP Law allowed commercial enterprise pledge to be established in favour of: (i) financial institutions authorised to grant loans; (ii) real persons or legal entities engaging in a credit sale; or (iii) cooperatives (kooperatifler). Article 5 of the Movable Pledge Law sets out the movables which can be pledged as per the Movable Pledge Law in a numerus clausus manner. This extended list of aforementioned items contains receivables, perennial plants, intellectual and industrial property rights, raw materials, animals, all kinds of earnings and revenues, all kinds of licences and permits, rental incomes, tenancy rights, all kinds of movable enterprise installation including machinery and equipment, consumable materials, stocks, agricultural products, trade name and company name, commercial licence plate and commercial line licence, commercial project, and wagons and railcards. In addition, these items can be also pledged even though a third party has the possession of the item subject to the pledge. However, the Movable Pledge Law expressly stipulates that it shall not apply to account pledges and pledges of which the subject matter is financial agreements pertaining to capital markets instruments and derivative financial instruments. The Movable Pledge Law defines the financial agreements as spot, future, forward, option or swap transactions which are based on financial instruments such as interest rate, merchandises, foreign currency, share certificates, bill of exchange, index, etc., repo and reverse repo transactions, any transactions similar to the above including other transactions used in financial markets and agreements containing any kind of combination of such transactions. Interpreting the wording of the Movable Pledge Law, we understand that share pledge will not be able to be established as per the Movable Pledge Law. However, we expect that the scope of the Movable Pledge Law will be further clarified by further secondary legislation or market practice offering more guidance on the matter. According to the Movable Pledge Law, the pledge over the movable will be perfected by registration of the pledge agreement with the Pledged Movables Registry. In order for the pledge agreement to be registered with the Pledged Movables Registry, the pledge agreement should be either (i) prepared in an electronic medium (electronic platform of the Pledged Movables Registry) and printed by a notary public, signed by the parties, followed by the certification of the signatures of the parties before the notary public; or (ii) the agreement should be executed ex officio before the official of the Pledged Movables Registry.
Uploads
Papers by Deniz Avcı