Law no. 115 of 2015

The Financial Regulatory Authority ("FRA") has launched the Egyptian Collateral Registry according to the Movable Collateral Law No. 115 of 2015. Egypt is considered one of the first countries to issue a law regulating movable guarantees in the Arab Region.

The Egyptian Collateral Registry is a central electronic record prepared for publishing the security rights on movables and is subject to the supervision and control of the FRA. The security rights on movables can be published by filling the form prepared for this purpose, including all basic information of the security agreement. Moreover, the law has excluded the pledging of movables owned by the Egyptian Government or foreign embassies, concessions or licenses granted by the government, movables owned by banks (except if necessary for the financing of their purchase), personal movables (except if necessary for the financing of their purchase), as well as the pledging of property owned in common between multiple individuals (unless all owners consent to the pledge).

This law aims to regulate the non-possession guarantee procedures over the movables through facilitating the funding, reducing its risks, enabling the funding for small and medium enterprises in case of absence of real estate assets, preserving the rights of the creditors by setting priorities in case the movable is secured for more than one creditor and preventing the debtor from transferring guarantees or repeating of collateral without notifying the creditors.

The most important advantages of the law are:

  • Replacing the paper-based system with the electronic system;
  • Recording of movable collaterals with the debtor's possession without being in the possession of the creditor;
  • Improving the investment competitiveness situation in Egypt by improving Egypt's ranking in the index of obtaining credit in the Doing Business report;
  • Authenticating the information published in the register as of the official documents in evidence;
  • Setting a penalty for disposing of movables without the creditor's consent;
  • Organizing the implementation procedures on the movables and arranging the rights of the creditors.

This register represents a positive credit for Egyptian banks, as it instills confidence for the donors of funding to obtain their rights, and determine urgent litigation procedures to preserve their rights. In December 2020, a total of 64,658 publications in the registry have been made, with a total amount of 721.2 billion Egyptian pounds, which indicates that many productive and service business, and in particular small and medium enterprises have been receiving funds to facilitate its operation.

Lastly, the movable collateral law is a drastic move taken by the Egyptian government to enhance the investment climate which reflects the efforts and initiatives of the government to stimulate the use of non-bank financial instruments in providing funds and expand the concept of movables used as a guarantee for funding to achieve sustainable investment development.

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