The New Movable Securities Law
Law no. 115/2015
As part of the 2018 reforms in Egypt with regards to investment and economic matters; Egypt has entered 2018 with a vigorous attempt to reform all procedures in an effort to facilitate investments and to protect all those who engage in business.
The Movable Securities Law no. 115/2015 was passed in 2015 governing all aspects of Secured Transactions between parties subject to a security Agreement. By virtue of this law, an Online Collateral Register was established to be maintained by Financial Regulatory Authority (EFSA) in which creditors are to register their security interest in any given collateral on the online database.
By Registering a Security Interest in Collateral on the online Registry, the Creditor thereafter enjoy certain protections, benefits and priority with regards to acquiring his or her interest in the collateral subject to a security interest in case of default.
Why is Law 115/2015 significant? Law no. 115/2015 calls for the creation of an online/electronic Securities Register in which creditors are required to register any security interest in collaterals and thus giving said interest protection and priority?.
Is the Securities Register operational? The electronic system has been created and implemented and the competent authority and is currently active as of March 11, 2018.
Why is the Securities Register Important? When discussing the importance of the Register, it is important to note that this Registry has been established Online and thus it is accessible to any and all persons who may have a vested interest with regards to any movable that may prospectively be subject to a security agreement or interest. That is to say, it has become easier for individuals to make the required investigation.
Where can the Registry be accessed? There are two locations listed in Cairo and Alexandria. However all submissions and registration as well as any inquiries can be made online at http://www.ecr.gov.eg
Who is covered by the Law? Provided that the transaction or debt in question is registered in accordance to the Law; the provisions and Law no. 115/2015 does not differentiate between incorporated and non-incorporated debtors. Article 1 of Law no. 115/2015 defined Debtor as ” Natural or Legal Person that is obliged to fulfill an obligation or a secured debt”.
Is Registration Manditory? The language and wording of Law no. 115/2015 suggests that Registration is optional. However, if a creditor decided not to register their respective security interest in the Register as set forth in the Law; this will have a negative effect with regards to perfecting the security interest and in turn may put the creditor opting to not register the security interest at a weaker position.
It is important to note that rights granted by virtue of registration in accordance to Law 115/2015 grants further benefits/privilege to creditors with regards to the provisions and process set forth in the new Bankruptcy Law no. 11/2018.
The Registration Process With regards to registering the security interest in electronic register; Article 6 of Law 115/2015 stipulates that any creditor is required to include all relevant information pertaining to the collateral and his respective interest in order for the security interest and respective registration to be valid.
When does registration become effective? In accordance to Article 6 of Law no. 115/2015 and Article 13 of it’s Executive Regulations, Registration in the Securities Register shall be effective when ” the creditor completes and submits the online form designated for this purpose. Said form shall include all necessary information contained in the Security Agreement as well as a description of the collateral; whether general or specific, as well as information pertaining to the parties to the Security Agreement and their capacity with regards to the collateral in addition to the term or period of the security interest.” Article 6 of the law further stipulates that the description of the collateral may be general or specific. With regards to the Security Agreement; Article 8 stipulates that the Security Agreement must include the following:(1) “a general or specific description of the collateral”;(2) duration of the interest; and (3) acceptance by the Debtor that the Security Interest will be registered.
Who can make inquiries? The Securities Registers grants all individuals the right to access the database and to search for information collateral registered within. In accordance to Article 10 of the Executive Regulations stipulating the procedures pertaining to searching the Securities Register ” to conduct a search on the Register; the inquirer must furnish certain data such as (1) the registration number (provided to the creditor upon registration, (2) national identification number of the debtor in case if the debtor is an natural person, or (3) the commercial registration number in case the debtor is incorporated.
Can the Register be used for purposes other than registration?
Article 4 of Law no. 115/2015 stipulates that the Securities Register shall be established for secured transactions on movable assets and the respective registration, amendment or cancellation.
Article 6 of the Law stipulates that the procedures pertaining to amendments or cancellation of registration shall be governed by the Executive Regulations.
In accordance to Article 8 of the Executive Regulations dictating the services provided by the Register “(3) to allow the requesting party to include amendments to the information submitted to the register”. Article 18 of the Executive Regulations also sets forth the procedures for amending registrations as well as the restrictions set forth pertaining to required approvals.
With regards to cancellations, Article 20 of the Executive Regulations stipulates that in order to cancel an existing submission or registration listed on the Registry; the secured creditor or a person having a secured interest listed on the Register. Said party must complete and submitted the designated electronic form for cancellation purposes; which should include the following information (1) Registration Number, (2) Applicant Party Information requesting cancellation and (3) a statement to the effect that the Registration subject to the cancellation is no longer valid to the creditor or the holder of the security interest and that it is no longer binding on the Debtor or the party granting said guarantee. All cancellations remain listed on the Register database with a remark of its cancellation for the period of the Security Agreement which was included in the initial submission.