Details on movable pledge reveals

Dunya Executive - - Business By Law -

The Turkish collateralization system has been modified in order to facilitate and diversify collateralisation options and enable small an d medium-sized businesses to swiftly secure financing. In this regard, the Turkish Parliament adopted the Law No. 6750 on Movable Pledges (the “Movable Pledge Law”) on October 2016, which is followed by the adoption of the following regulations by the Ministry of Customs and Trade (the “Ministry”), on December 31, 2016:

• Regulation on the Movable Pledge Registry;

• Regulation on the Perfection and Enforcement of Movable Pledge; and

• Reg ulation on the Valuation of Movable Assets in Commercial Transactions.

• The new regulations, along with the Movable Pledge Law, are effective as of January 1, 2017.

So what is changing?

Registry, TARES and perfection

• The Ministry, or an institution authorized by the Ministry, will establish the movable pledge registry (the “Movable Pledge Registry”). In this respect, the Ministry entered into an agreement with the Union of Turkish Notaries (the “Union”) and conferred the Union with the authority to establish the Movable Pledge Registry. Accordingly, the Union established the Movable Pledge Registry and notaries will be authorized to carry out the registration formalities. The Ministry will be responsible for supervising the Union. The Movable Pledge Registry is not operational as of the date of this alert.

• The movable pledge registry system (Taşınır Rehin Sicil Sistemi) (“TARES”) (accessible at has been established and will enable the tracking and publicity of all records related to movable pledges.

• All pledge agreements under the Movable Pledge Law and any amendment thereto must be registered with the Movable Pledge Registry. Parties to a pledge agreement must execute the agreement, either in writing before a notary or electronically through e-signature, and submit it to TARES.

• Parties are exempt from any tax, duty or fee for transactions conducted at the Movable Trade Registry, including the drafting of pledge agreements and the registering of such agreements with the Movable Pledge Registry.

• The notary will examine the validity of legal conditions and minimum required content for the perfection of movable pledges. The Movable Pledge Registry records are publicly available and therefore enforceable against third parties. However, in case the Movable Pledge Registry’s records do not contain the minimum required content, those records and legal consequences related to them will not be enforceable against third parties.

• There are certain restrictions to the freedom of contract in favor of the pledgors. Parties cannot in- corporate provisions restricting the pledgors’ right to dispose or sub-pledge the movable asset or their right to assign a subsequent pledgee.

• If a pledgor transfers a pledged movable to a new owner who undertakes the debt, the pledgee must notify the pledgor in writing within one year following the transfer in order to reserve its right to pursue the pledgor. Otherwise, the pledgor will be discharged.

• The relevant parties who successfully prove their interest are entitled to request the movable pledge records either electronically or through the notaries.

• A movable pledge will be released and removed from the Pledged Movable Registry when requested by (i) the pledgee upon the payment of debt; (ii) the pledgor with sufficient documents indicating the payment of debt; and (iii) the court. After a movable pledge is released and removed, the Movable Pledge Registry will keep the records for 20 years.

Scope of pledge

• If the secured obligations can be calculated, the value of the pledged assets cannot exceed 120% of the total debt.

• With recent changes, commercial enterprise pledges are now including all movable and immovable assets allocated to the commercial enterprise whereas, under the abrogated Law No. 1447 on Commercial Enterprise Pledge, including the immovable assets in the scope of a commercial enterprise pledge was not possible.

• The statute of limitations will cease with the registration of the relevant pledge agreement with the Movable Trade Registry.


• In case the debtor defaults on the secured obligations, the pledgee is entitled to:

▼ with an exception to the Lex Commissoria, request the transfer of ownership of the movable assets to itself within seven days from the default event;

▼ assign its receivables to a third party or asset management company; and

▼ use, lease, or allow third parties to make use of licenses relating to movable assets whose ownership cannot be transferred.

• If the value of the secured obligations is higher than the pledged asset’s value, the pledgee may request the transfer of ownership of the pledged asset by setting off 90% of the pledged asset’s value against the secured obligations. The pledgee may initiate enforcement proceeding as per the general provisions of the Enforcement and Bankruptcy Code for the remaining receivables. On the other hand, if the value of the secured obligations is less than the pledged asset’s value, the pledgee may request the transfer of ownership of the pledged asset by paying the difference.


New pledge regime offers a much easier and less cumbersome method for the perfection of pledges over movable assets and this regime will become a real collateralization option once the Movable Pledge Registry begins its operations. Businesses seeking financing can now utilise their movable assets more effectively as a source of collateral for their loans, which, in turn, will increase businesses’ ability to obtain financing for their operations.

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