On 15 December 2016, the Ministry of Investment passed the Executive Regulations of the Movable Collaterals Law no. 115/2015 which was passed a year ago on 15 November 2015 (Movable Collaterals Law).
The Law introduces into the Egyptian system an overarching law for taking non-possessory security over diversified movable assets. The competent authority responsible for implementing the law is the Egyptian Financial Supervisory Authority (EFSA)
The aim of the Law and its executive regulations is to facilitate access to credit through a well-defined legal regime that is in line with the international standards, such as those established by the United Nations Commission on International Trade Law (UNCITRAL) and by the World Bank.
According to Article 1 of the Movable Collateral Law, movables acceptable as collateral in creating non-possessory security shall include:
- present or future tangible assets, and
- present intangible assets.
The Law gave examples to the movables that are permitted to serve as collateral to include, inter alia, the following:
- Current and deferred debts.
- Bank accounts, whether saving or current accounts.
- Negotiable document that embodies a right to delivery of goods such as the bill of lading and warehouse receipts.
- Negotiable instruments such as a cheque, bill of exchange, promissory note, bank depositary notes that embodies a right to payment.
- Equipment, machinery.
- All kinds of intellectual property rights like patent, trademark, trade name, and copy rights.
The Law defined the secured creditor to be banks, financing institutions, and other institutions and individuals granting financing or credit as detailed in the executive regulations. The executive regulations numerated the categories of such secured creditors.
The Law established a centralized electronic registry to record all security rights; and requires only the registration of a notice that sets out the basic details of the security right to which the notice relates. The design and operational details of the register are addressed in detail in the Executive Regulations.
The Law provides for facilitated the enforcement of secured creditors' rights by efficient out-of-court enforcement procedures which would provide the secured creditor with the opportunity to directly sell or take possession of the encumbered assets without further involvement of official authorities.