The Act for Amendment and Supplement to the Registered Pledges Act (AASRPA/the Act) was promulgated in the State Gazette, issue 105 of 30th December 2016, and introduces amendments that aim to ensure legal certainty and to create state guarantees for the lawful conduct of the procedure for imposing pledges. Thus, the AASRPA shall significantly improve the commercial turnover and the use of the pledges as a security tool. The main amendments cover:


PROCEDURES AND RIGHTS:

• A higher level of legal certainty shall be guaranteed by the stipulated constitutive effect of the entry of a pledge in the respective registry. The regime is unified with that of mortgages – the pledge shall be deemed established subject to entry of the pledge agreement into the Central Pledges Registry;

 The scope of persons who may be pledge creditors is extended as now entities incorporated by persons working in the agricultural sector, craftsmen and freelancers, and persons exercising hotel services non-profit organisations may grant registered pledges in the course of their activity;

• Depositories in enforcement proceedings should be either attorneys-at-law or registered auditors and the special “trusted” accounts of the depositors shall not be subject to any distrain orders. Depositories should be insured for the time during which they operate as such and the insurance amount should be no less than the amount sought by the foreclosing creditor within the enforcement proceedings;

• The amendments introduce the requirement for the pledge creditor’s explicit consent for disposal of pledged property which falls beyond the scope of the ordinary activity of the pledge creditor by occupation and such consent is subject to registration with the Central Pledges Registry. If such explicit consent of the pledge creditor was not obtained prior to the disposal by the pledgor, such disposal is not enforceable vis-à-vis the pledge creditor and the transferee acquires the property encumbered with the pledge. The Act also provides that this status shall be extended to any subsequent acquirer unless the latter proves to have acted in good faith. This regulation makes it impossible a fraudulent pledge creditor to deviate and to dispose of the pledged property in order to evade the enforcement over it by the creditor;

• Art. 32, para. 5 introduces a new rule under which the subsequent pledge creditor may file commencement of enforcement over the pledged property with the CPR only if prior ranking pledge creditors have granted their prior explicit consent;

 The ways in which the pledgee could be satisfied under the Registered Pledges Act are systemised in one place. The relationships between the creditors when over the pledged property is performed an individual execution are clarified in order to overcome the conflicting jurisprudence;

• In case insolvency proceedings were opened against the pledgor prior to commencement of enforcement by the pledgee over the pledged property, the pledgee will not be entitled to file such commencement, but should join the insolvency proceedings and be satisfied within the foreclosure thereunder;

 The pledge creditor under the Registered Pledges Act is satisfied in the order in which a primary enforcement is conducted towards the pledged property;

• The amendments introduce the opportunity the pledge creditor to be given access to the premises in which the management of the going concern is being held as well as to the trade books of the pledgor. In case the pledgor does not cooperate on the above, the pledgee is entitled to seek to gain such access forcibly through an enforcement agent under the proceedings of the Civil Procedure Code (CPC);

• In case of lack of cooperation from the pledgor within the enforcement proceedings, the pledgee is also entitled to request from the competent court to order a suitable interim measure under Art. 391, para. 1 item 3 of the CPC, necessary for the purpose of the enforcement and satisfaction of the secured creditor(s);

• The new Art. 32a regulates the rights of pledge creditor in case of competition between different enforcement proceedings. If prior to commencement of the enforcement under the Registered Pledges Act foreclosure has been commenced under the CPC or the Tax and Social Security Procedure Code (“TSSPC), the pledgee shall be deemed joint creditor in such enforcement proceedings and shall be satisfied thereunder by its order in the preferential satisfaction. Further under Art. 43, para. 4 if insolvency proceedings are opened against the pledger before filing by the pledgee of commencement of enforcement under the Registered Pledges Act, the pledgee shall join the insolvency proceedings, claim the due amounts in the insolvency proceedings and be satisfied by the order of its preferential satisfaction under Art. 722 of the Law on Commerce (the “LC”);

• The amended Art. 17 explicitly prohibits the pledger to dispose of the pledged receivable or pledged book-entry shares, including by creation of subsequent pledge over the same, without the prior explicit consent of the pledge creditor in writing and with notary certified signature under such consent;

 The pledge over a floating pool is deemed transferred on its elements from the moment of entry of the commencement of enforcement. The transfer does not affect the opposable pledge rights over individual elements of the floating pool, that occurred prior to the entry of the commencement of enforcement, unless the pledge creditor who commenced foreclosure has already registered a prior-ranking pledge over such individual elements of the floating pool;

• The new paragraph 8 of Article 38 of the Registered Pledges Act clarifies the consequences of the sale of a pledged property in relation to other types of security interest which have been created and attachments which have been forced over such property. It is provided that the sale of the pledged asset conducted by the pledge creditor under the Registered Pledges Act deletes only the security interests created pursuant to the Registered Pledges Act, and any other security interest (i.e. mortgages) or attachments over the respective asset remain to be valid and effective;

• Due to the controversial case law to date, the AASRPA stipulates that the pledger may dispute the secured obligations or the security interest by filing a claim before the competent court, and if a commencement of foreclosure has been filed, such claim may be grounded only on new material facts which has occurred after the date of commencement of foreclosure;

• An opportunity for any third person to file a claim was introduced in order to establish whether the pledge is not opposable to such third-person or that the pledged property does not belong to the pledger. This right is valid in case the third person has been affected by the enforcement against the pledged property.


ORGANIZATION AND FUNCTIONING OF THE CENTRAL PLEDGES REGISTRY:

 A significant change concerning the organization and functioning of the Central Pledges Registry was introduced, as it was transferred under the jurisdiction of the Registry Agency. It is expected to modernize and improve the information system towards its full electronic capability, to provide e-Services, including e-Filing of entries and providing electronic access to the information in the registry. The Central Pledges Registry shall become a “one stop shop” for an extremely wide range of services to customers and shall create a safe and transparent environment for execution and performance of loan agreements and their securitization;

• With the transfer of the administration of the Central Pledges Registry to the electronic database at the Registry Agency, some amendments to the basic rules of registration procedures under the Registered Pledges Act which regulate the public access to the Registry via the Internet are expected to be introduced, and the public access via the Internet shall be effective as of 1st September 2018;

• The new amendments specify in details the circumstances subject to initial and additional entry in the Registry, the persons authorized to make entries, as well as the documents and consents necessary in order to make a specific entry;

• The filing of applications for registration except on paper can now be done electronically 24 hours a day, 7 days a week, which shall extremely facilitate the business and citizens;

• The challenging of refusals to entry in the Central Pledges Registry is assigned to district courts, effective as of 1st September 2018.