This is an update of our alert dated 5 December 2012. Since our prior alert, there have been certain legislation changes addressed below.
The public unified register of pledges of movable property (the Register) was initially introduced by Federal Law No. 166-FZ, dated October 2, 2012 (for detailed information, please see our alert on Registration of Pledges of Movable Property). Later amendments to various legal acts, including the Russian Civil Code (the Law), introduced further regulation on the filing of such pledges with the Register.
The Register will contain publicly available information on the pledgees in addition to publicly available information on the pledgors and the pledged movable property (as was initially envisaged).
Registration of the agreements on pledge of movable property with the Register is not mandatory. However, according to the Law, registration with the Register protects the security interest and has the following legal consequences:
- The priority of the pledges of movable property created prior to 1 July 2014 and registered with the Register during the period from 1 July 2014 to 1 February 2015 will be established by the date of the relevant pledge agreement. Starting from 2 February 2015, priority of such pledges will be identified by the date of their registration with the Register;
- The priority of the pledges of movable property created starting from 1 July 2014 will be established by the date of registration of such pledges with the Register; and
- Protection of the pledge from the bona fide acquirer1. An acquisition by the bona fide acquirer of the pledged movable property is new ground for the termination of the pledge agreement. Accordingly, if the pledge is not registered, there is a risk of termination of such pledge agreement in the event of an acquisition of the pledged movable property by the bona fide acquirer. In order to avoid the above risk, it is recommended that Notifications of any agreements on pledge of movable property in force be registered as soon as possible.
1 A person who acquires pledged property and who did not know and could not have known of the existence of such pledge (either from the Register or from any other source).
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.