Salient Pointers of Proclamation No. 1147/2019 And the EMCR
Definition of Movable Property
The definition in the Proclamation encompasses all movable assets including, among other things (i) any movable tangible or intangible assets, existing or in the future; (ii)inventories, agricultural products); (iii) bank accounts; (iv) documents of title ( bills of lading); and (v) motor vehicle, farming equipment, etc., see Article 2(27) of the Proclamation No. 1147/2019 for a detailed list.
The ability to specifically deal with accounts receivable, future assets, documents of title, fungible assets, fixtures and also bank accounts, has been stipulated in the proclamation, to give greater comfort to lenders interested in such security.
The Law does not apply to movable assets that require registration in a special register under an existing law (like listed shares, ships, aircraft).
Registration of Prior Transactions
The Proclamation requires that transactions entered into before the effective date of the law can be registered in the new EMCR.
For such transactions to retain priority, they should be registered within 12 months after the coming into force of the proclamation to facilitate the migration of the “old” transactions into a new system.
Financial institutions can pre-populate the data into an Excel file, and the registry will upload those transactions to the system. Please contact the EMCR staff for instructions.
EMCR Best Practices
- Accuracy – capture the exact information presented
- Speed – speed of registration and searching; notices reflected in search as soon as effective
- Accessibility – any time, from any place
- Cost effectiveness – fees cover costs of operation; not a general revenue source for government
- Simplicity – reduce risk of error & encourage use
- Rule-based decision-making – no bureaucratic discretion in registration and searching
Who Should Register?
- Banks, non-bank financial institutions, leasing companies who provide loans, leases, assignment of rights.
- Individuals & businesses who provide credit secured with movables.
- Creditors practicing fiduciary transfer of titles and consignment arrangements
- To protect the rights of creditors when a debtor (borrower) has defaulted on his/her obligations;
- To help any interested party find out if there are prior registrations against the assets offered by the borrower as collateral for a loan;
- To establish priority of security right of the creditor from the date and time of registration.
What to Register
A wide range of movable assets that are relied on as collateral:
- Accounts Receivable
- Machinery and Equipment
- Motor Vehicles
- Intellectual Property
- Other tangible and intangible property
How to Create a User Account
You will first have to create an EMCR account. You can create the account as a company or as an individual. In order to create account, you must submit the required documentation to the EMCR for them to verify your identity and issue you and user id and password.
An EMCR user account allows you to:
- create, amend and cancel registrations;
- choose your preferred payment method;
- create multiple users so others in your company can use the same account; and
- customize the access you provide to users based on the transactions you want them to perform
What is needed to create a registration?
Please have the following information at hand:
- secured party details, including names and identifiers;
- grantor name and identifier;
- information about the goods/assets (collateral) including serial numbers, if applicable; and
- credit card or other payment methods info
How to Search
Who can check the Register?
Anyone wanting to know about pledge rights can check the EMCR. The most common reasons for searching are:
- buyers, searching to make sure that the goods they are buying do not have loan owed against them;
- a business or a financial institutions searching a potential customer as part of their due diligence process; and
- liquidator or bankruptcy trustee searching for current pledge rights.