Law No. 115 of 2015 on the Regulation of Movable Collateral

Official Gazette - No. 46 Recur (A) on 15 November 2015

Decree of the President of the Arab Republic of Egypt Law No. 115 of 2015 Issuing the Law on the Regulation of Movable Collateral

President of the Republic
After reviewing the Constitution;
And the Penal Code;
And Law No. 11 of 1940 on the Sale and Mortgage of Commercial Establishments; And Law No. 114 of 1946 on the Regulation of Real Estate Registration; And the Civil Code; And the Criminal Procedure Code; And the Civil and Commercial Procedures Law issued under Law No. 13 of 1968; And Law No. 25 of 1968 on Evidence in Civil and Commercial Matters; And Law No. 26 of 1976 on Certain Provisions Regarding Aircraft; And the Law on Joint Stock Companies, Companies Limited by Shares, and Limited Liability Companies issued under Law No. 159 of 1981; And the Maritime Commerce Law issued under Law No. 8 of 1990; And the Capital Market Law issued under Law No. 95 of 1992; And the Financial Leasing Law issued under Law No. 95 of 1995; And the Commerce Law issued under Law No. 17 of 1999; And the Central Depository and Registration of Securities Law issued under Law No. 93 of 2000; And the Intellectual Property Protection Law issued under Law No. 82 of 2002; And the Central Bank, Banking and Currency Law issued under Law No. 88 of 2003;

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And Law No. 15 of 2004 on the Regulation of Electronic Signatures and Establishing the IT Industry Development Authority; And the Law on the Establishment of Economic Courts issued under Law No. 120 of 2008; And Law No. 10 of 2009 on the Regulation of Supervision of Markets and Non-Banking Financial Instruments; And Law No. 141 of 2014 on the Regulation of Microfinance Activity; And after approval by the Board of Directors of the General Authority for Financial Supervision; And after taking the opinion of the Supreme Council of the Judiciary; And after approval by the Council of Ministers; And based on what the State Council deemed appropriate;

Decreed
The following Law:
( Article One )
The provisions of the accompanying law shall apply to rights secured by movable property in the possession of the debtor or grantor, which the parties to the security agreement agree to register in accordance with its provisions, without prejudice to provisions governing special types of movable mortgages, including pledge under the Civil Code, mortgage of commercial establishments, and mortgage of securities.

( Article Two )
The Minister responsible for applying the provisions of Law No. 10 of 2009 mentioned above shall be the Minister responsible for applying the provisions of this Law, and the General Authority for Financial Supervision shall be the competent administrative authority for applying the provisions of the accompanying law. The Minister responsible shall issue the executive regulations for the accompanying law after consulting the aforementioned Authority, within three months from the date of its implementation.

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( Article Three )
Except for disputes and lawsuits under the jurisdiction of the State Council, Economic Courts shall have jurisdiction to adjudicate disputes and lawsuits arising from the application of the provisions of the accompanying law, as well as criminal lawsuits arising from crimes stipulated in the accompanying law. The provisions of the Law on the Establishment of Economic Courts, the Civil and Commercial Procedures Law, the Penal Code, the Criminal Procedure Code, and the Law on Evidence in Civil and Commercial Matters shall apply, insofar as no special provision exists in the accompanying law.

( Article Four )
Creditors may register rights created in their favor on movable property before the implementation of this Law's provisions by following the procedures set forth in the accompanying law.
In the event of registering any of the aforementioned rights, the priority of such right shall be determined from the date it becomes enforceable against third parties under the law by which it was created, or from the date of its registration in the Register, whichever is earlier.

( Article Five )
This decree shall be published in the Official Gazette and shall take effect the day following the expiration of three months from the date of its publication.
Issued at the Presidency on 2 Safar 1437 AH
( Corresponding to 14 November 2015 AD ).

Abdel Fattah El-Sisi

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Law on the Regulation of Movable Collateral ( Chapter One ) Definitions and Scope of Application Article ( 1 ) For the purpose of applying the provisions of this Law and the decisions issued to implement it, the following words and expressions shall have the meanings indicated alongside each:
Register: The movable collateral registration register established in accordance with the provisions of this Law.
Movable Property: Any existing or future tangible movable or existing intangible movable owned by the debtor or grantor, serving as security for an obligation, debt, or credit facility in accordance with the guidelines set by the executive regulations, and in particular:
1 - Due or deferred debts.
2 - Credit balances with banks, including deposit accounts or current accounts.
3 - Negotiable instruments transferable by delivery or endorsement that evidence entitlement to an amount or ownership of goods, including commercial papers, bank deposit certificates, shipping documents, and warehouse receipts.
4 - Equipment, tools, or inventory.
5 - Trees, agricultural crops, animals, or birds.
6 - Allocated real estate, provided it can be separated from the real estate without causing damage to either.
7 - Metals prior to extraction.
8 - Rights over creations and innovations, including patents, trademarks, copyrights, and other intellectual property rights.
Future Movable Property: Tangible movable expected to exist in the future in the ownership of the debtor or grantor according to the ordinary course of business.

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Creditor: The secured party from banks or entities conducting financing activities and other entities and persons granting financing or credit as determined by the executive regulations.
Debtor: The natural or legal person obligated to fulfill a secured obligation or debt.
Grantor: The owner of the secured movable, whether the debtor or a third party.
Security Interest: The accessory real right established on the secured movable pursuant to the security agreement concluded between the creditor, debtor, and grantor to fulfill an obligation or debt.
Security Agreement: The agreement concluded between the creditor, debtor, and grantor, documenting the creditor's rights on the movable, guided by the model form issued by the competent administrative authority.

Article ( 2 )
The provisions of this Law shall apply to rights secured by movable property in the possession of the debtor or grantor, which the parties to the security agreement agree to register in accordance with this Law, including:
1 - Rights arising from the conditional sale of movable property with deferred transfer of ownership until full payment of the price.
2 - Rights arising from the conditional sale of movable property with a buy-back or repurchase option upon the debtor's default on obligations.
3 - Rights arising from the use or licensing of intellectual property rights.
The provisions of this Law regarding the enforceability of the security interest against third parties, priority, and enforcement on the secured movable shall also apply to the following rights:
1 - The creditor's right in the pledge of a debt.
2 - The lessor's right in financial or operational leasing exceeding six months.
3 - The seller's right of retention of title.
4 - The creditor's right in the mortgage of a commercial establishment, provided it is registered in accordance with this Law.

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The provisions of this Law shall not apply to rights arising from the pledge of securities, nor to rights arising from future movable property resulting from inheritance, will, pensions, life insurance policies, compensation claims, alimony, or wages or salaries, all in accordance with the rules determined by the executive regulations. A possessory pledgee may register their pledge by entry in the Register, provided this does not affect the enforceability of the right against third parties under the provisions of the Civil Code. In the event of registration, the provisions regarding priority and enforcement contained in this Law shall apply to such pledge.

Article ( 3 )
No security interest may be created on the following movables:
1 - Movable property owned by the State, endowment entities or bodies, or owned by foreign embassies and entities enjoying immunity.
2 - Privileges and licenses granted by the State, public entities, or any public legal person.
3 - Movable property owned by banks, except equipment necessary for their operations to finance their purchase.
4 - Movable property designated for personal or household purposes, except to finance their purchase.
5 - Co-owned movable property unless all owners consent to the creation of the security interest.

( Chapter Two )
Movable Collateral Register
Article ( 4 )
The competent administrative authority shall establish a public electronic register for the registration of security rights and any amendments or cancellations thereto, in application of the provisions of this Law.
The competent administrative authority may entrust the establishment and operation of this Register to a specialized entity or company under its supervision, in accordance with the rules and guidelines determined by the executive regulations. In all cases, the data and information contained in the Register shall remain the property of the competent administrative authority.

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Article ( 5 )
The entity operating the Register shall establish a website on the internet, through which registered data may be accessed upon payment of an access fee determined by the executive regulations, not exceeding five hundred Egyptian pounds annually, in accordance with specifications and guidelines set by the competent administrative authority. It is prohibited to create websites similar to the aforementioned website, or those likely to mislead the public into believing they contain data or information registered in the Register, without prior approval from the competent administrative authority. Obtaining a certified copy of the registered data shall be subject to guidelines and payment of a fee determined by the executive regulations, not exceeding one hundred Egyptian pounds. Registered data concerning the time and date of registration, authenticated by the Register, shall carry the evidentiary weight of official documents.

( Chapter Three )
Rules for Registering Security Interest in the Register Article ( 6 ) Registration of the security interest established on movable property shall be effected by entry in the Register through the creditor completing the electronic form designated for this purpose, which must include all basic information contained in the security agreement, and in particular a description of the secured movable, whether general or specific, identification of the parties to the security agreement and their capacities regarding the secured movable, and the duration of the security. The executive regulations shall determine procedures for amending or cancelling registration, as well as the service fees charged by the Register, not exceeding five hundred Egyptian pounds.

Article ( 7 )
Subject to the provision of Article (2) of this Law, the debtor or grantor must have legal capacity and the right to create a security interest on the secured movable.
If the grantor is a person other than the debtor, they may, in addition to raising defenses specific to themselves, raise any defenses available to the debtor regarding the debt, and this right shall remain with them even if the debtor waives it.

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Article ( 8 )
The following are required for the creation and enforceability of a security interest:
1 - The security agreement must be concluded in a customary or official document, or may be in electronic form in accordance with Law No. 15 of 2004 mentioned above.
2 - The grantor must be authorized to create the security interest on the secured movable.
3 - The creditor must commit to providing the agreed financing as consideration for creating the security interest.
The security agreement terms must include at least the following:
1 - A general or specific description of the secured movable, provided the description is specific if the collateral consists of used items designated for personal or household purposes.
2 - The duration of the security.
3 - The debtor's or grantor's consent to register the security interest.
The parties to the security agreement may stipulate commercial terms they deem appropriate for the contract, including the following:
1 - The debtor's or possessor's obligation to take all necessary measures and procedures to preserve, maintain, or care for the secured movable.
2 - The debtor's obligation to use, maintain, and repair the secured movables in accordance with their intended purposes, recognized technical standards, and agreed technical specifications.
3 - The debtor's obligation to notify the creditor of any defects affecting the secured movable that prevent its use, wholly or partially.

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4 - The extent of the creditor's authority to monitor the debtor's use of the secured movable for its designated purpose and to ensure its preservation and maintenance.
5 - The priority of selling the secured movables in the event of the debtor's default on obligations.
The competent administrative authority shall make a model security agreement available on its website free of charge.

Article ( 9 )
More than one security interest may be created on a single movable, and the security agreement may cover more than one secured movable or a group of fluctuating movables.

Article ( 10 )
The secured movable shall be held in trust by the debtor or grantor under the security agreement until its expiration, requiring them to exercise ordinary care in preserving and maintaining it commensurate with its nature.

( Chapter Four )
Enforceability of Security Interest against Third Parties Article ( 11 ) Registration in the Register in accordance with Article (6) of this Law renders the security interest enforceable against third parties.
Any interested party may object before the summary relief judge to any registration of security rights in the Register, without such objection affecting the enforceability of the security interest against them or against third parties.

Article ( 12 )
The creditor may assign the registered security interest to another person, and such assignment shall be enforceable against third parties from the date of its registration in the Register.
This assignment shall not be enforceable against the debtor and grantor except from the date of notifying them in the manner specified in the security agreement.

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The creditor may also assign in writing their priority ranking for the security interest granted to them under this Law, within the limits of the debt secured by such interest. This assignment shall be enforceable against third parties from the date of its registration in the Register.

Article ( 13 )
Entities authorized by law to collect state rights or other legally established rights shall register court decisions or rulings that create rights on movables, without prejudice to these entities' right to proceed with enforcement on such movables in accordance with their specific laws and subject to Article (24) of this Law. The competent court must also, upon written request from the judgment creditor, declare their right to register rights arising from the debtor's movables in the following two cases:
1 - Issuance of a final interim order placing a conservatory seizure on these movables.
2 - Issuance of a final interim order for enforcement on these movables.
The competent court shall also notify the Register of bankruptcy rulings to register them, and the liquidator is obligated to register the liquidation decision in the Register.
All registration procedures stipulated in this Article are exempt from the fees stipulated in this Law.

( Chapter Five )
Effects of Registering Security Interest
Article ( 14 )
Amendment or cancellation of registration terms or duration may only be effected by a final judgment or upon the creditor's request accompanied by an agreement of both parties.
If the security interest expires before the registration period specified in the Register ends, the creditor is obligated to cancel the registration within ten days at most from the date of expiration. The cancellation shall not be enforceable against any creditor whose rights on the same movable under the same contract were registered, unless they consent to the cancellation.

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If the creditor fails to cancel the registration within the aforementioned period, the summary relief judge shall issue an order cancelling the entry within two working days at most from the date of the request, and the creditor shall be liable to compensate the debtor or grantor, as applicable, for actual damages suffered by either. Registration, renewal, and amendment costs shall be borne by the creditor unless otherwise agreed, and cancellation of registration shall be exempt from any fees or costs.

Article ( 15 )
If the secured movable becomes real estate by allocation, the security interest shall remain enforceable against third parties, and such right shall rank ahead of other real rights established on the real estate, provided that the security interest is noted in the real estate register if the real estate is registered. A security interest may be created on allocated real estate in accordance with this Law, and the ranking of the security interest in this case shall be determined from the date of its registration in the Register and in the real estate sheet before the notarization of any other rights on the real estate.

Article ( 16 )
The security interest shall remain enforceable against third parties if the secured movable attaches to another movable in a separable manner.
In the event of creating a security interest on fungible movables, the security interest shall remain enforceable if those movables become mixed with similar ones. In this case, enforceable security interests against third parties on the total fungible movables shall rank equally, and each right shall be determined by the proportion of its debt to the total of the mixed movables from the date of mixing, in accordance with guidelines determined by the executive regulations. If the debtor obtains financing to purchase additional movables that form part of a pool over which other rights have previously been created, the financier shall have priority in recovering their rights from these additional movables, provided they are registered in the Register within a period not exceeding three working days from the date of possession. In all cases, other creditors with registered rights on the movables shall be notified in accordance with guidelines determined by the executive regulations.

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Article ( 17 )
The debtor may dispose of or lease the movable after repayment of the secured debt or its balance, as applicable, and after deducting the early settlement discount agreed upon in the security agreement, in accordance with procedures determined by the executive regulations. The debtor may sell or lease the movable to another person encumbered with the security interest, and the original debtor shall guarantee the buyer or lessee in fulfilling obligations arising from the security agreement. Creditors with registered secured rights may trace the movable in any hands and shall be entitled to recover their rights before ordinary creditors according to each creditor's ranking. If multiple security interests exist on the secured movable, the ranking of the security interest shall be calculated from the time and date of its registration in the Register, regardless of the date creating the right in these securities. The holder of the earlier registration shall recover their right before subsequent creditors. Multiple grantors may, in the event of their plurality, appoint an agent to exercise the rights granted to them over the debtor's movables. The debtor or a third party may not assert against the creditor any right conflicting with Register data concerning the time and date of registration. Nevertheless, the movable shall vest in the buyer or any other person acquiring a right thereon free of the registered security interest if all creditors with registered rights on the movable consent thereto, or if the disposal of the secured movable was carried out within the ordinary course of business of the grantor.

Article ( 18 )
The security agreement shall cover the tangible or monetary consideration resulting from the sale of the secured asset, its use, its exchange for another, or compensation for its loss of value or damage. It shall also cover the proceeds generated by the movable or the fruits of its exploitation to satisfy the creditor's rights stipulated in the security agreement, unless otherwise agreed in the security agreement.

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In the event of insurance on the movable or its destruction, the creditor shall have on the amounts arising from insurance or the right accrued to the owner of the movable as compensation, if the cause for entitlement is established, the same rights and privileges they held over the insured or destroyed movables.

Article ( 19 )
The creditor may request the summary relief judge at the competent court to inspect the movable, the premises where it is located, and the grantor's workplace, books, and registers during the enforceability of the security interest to verify that the movable has not been disposed of or that no act diminishing the creditor's rights has been committed. If the inspection reveals that the movable has been disposed of or that serious neglect in its maintenance or care has occurred in accordance with the security agreement, the summary relief judge, upon the creditor's request, may order the debtor and the grantor of the secured movable to:
1 - Repair and maintain the secured movable at the expense of the owner of the secured movable or the debtor within the period specified in the notice.
2 - Provide alternative or additional security.
3 - Declare the debt due without the need to obtain a court order.
The creditor's taking of the aforementioned measures shall not prevent them from exercising other rights stipulated in the security agreement, this Law, or any other law.

Article ( 20 )
In the event of registering the debtor's bankruptcy or declaring their insolvency, or taking liquidation measures, the movables registered in the Register shall not enter the bankruptcy estate nor the general guarantee of creditors, provided that these movables were registered before the commencement of bankruptcy, insolvency, or liquidation proceedings. In the cases mentioned in the preceding paragraph, creditors with registered rights under this Law must take measures to sell these movables in the manner specified in the security agreement and recover their secured rights within one year at most from the date of registering the bankruptcy, declaring insolvency, or initiating liquidation, subject to the early settlement discount specified in the security agreement. Any surplus from the sale proceeds exceeding the satisfaction of these creditors' rights shall be returned to the grantor or debtor, as applicable.

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( Chapter Six )
Enforcement on Movable Property and Creditor Ranking Article ( 21 ) The creditor may recover their right from the secured movable if the security agreement so stipulates, without following the enforcement procedures set forth in this Law, in any of the following cases:
1 - If the secured movable is a debt owed by a third party, it shall be collected including collection costs.
2 - If the secured movable is transferable negotiable instruments, the amounts or goods represented by those instruments shall be collected.
3 - If the secured movable is a deposit account, current account, or any other credit account, set-off shall be effected if the creditor is a bank holding that account, and a claim shall be made if the account is held at another bank.

Article ( 22 )
If the security agreement stipulates that the creditor may sell the movable in the event of the debtor's failure to fulfill obligations or repay the secured debt or installments on time and according to contract terms, the creditor may not commence sale procedures until five days have elapsed from serving the debtor with a registered notice with proof of receipt to fulfill the obligation, as well as notifying creditors with registered secured rights on the movable in accordance with guidelines and procedures determined by the executive regulations. If the security agreement does not stipulate this, the creditor may, after five days from the date of serving the debtor with the fulfillment notice, petition the competent judge at the court where the debtor's domicile is located to order the sale of all or part of the movable. The judge's order for sale may not be executed until five days have elapsed from notifying the debtor and creditors with registered secured rights, specifying the place, date, and time of the sale. The sale shall be conducted at the time and place designated by the judge and in the manner determined by them, commensurate with the nature of the secured movable. The creditor may sell the movable without following the procedures and timeframes in the preceding two paragraphs in the absence of secured rights for other creditors on the same movable and with the debtor's consent, provided they exercise the care they would in their own affairs, as well as in other cases determined by the executive regulations according to guidelines set therein. The sale of the secured movable in this case shall purge the movable of all debts, and creditors' rights shall transfer to the proceeds.

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In all cases, the sale may not cover more than what is sufficient to satisfy the creditor's rights and sale costs.
The executive regulations shall determine procedures for depositing the sale proceeds with the treasury of the competent court, preparing a list ranking entitled creditors, and deadlines for distributing the sale proceeds.

Article ( 23 )
The creditor shall be liable to compensate the grantor, debtor, and any other right holders on the secured movable, as applicable, for damages resulting from their violation of the enforcement procedures stipulated in this Law and its executive regulations. The claim for compensation for damages shall be time-barred after six months from the date the event giving rise to it occurred or from the date of knowledge thereof, whichever is later, unless the act constitutes a felony or misdemeanor under this Law or any other law, in which case the claim for compensation shall not be time-barred until the criminal prosecution is time-barred.

Article ( 24 )
Holders of security interests registered in accordance with this Law shall have a priority right on the secured movable preceding all other privileges and mortgages established in other laws, except court costs and fees and enforcement costs on the movable, subject to the rights of possessory pledgees under the provisions of the Civil Code.

Article ( 25 )
If the proceeds from the sale of the secured movable and the returns resulting from it stipulated in Article (18) of this Law are insufficient to satisfy the obligations and rights of creditors registered in the Register, they shall be distributed according to the following order:
1 - Costs of repairing, maintaining, and preparing the movable for sale.
2 - Fees and enforcement costs on the movable.
3 - Payment of amounts due to holders of registered security interests on the movable according to their priorities under this Law.
4 - Payment of amounts due to holders of privileges and other rights established according to their priorities under the laws governing them.
If the proceeds from the sale of the secured movable are insufficient to satisfy the rights of some or all creditors, each creditor may claim the remaining debt value and its returns from the debtor according to general rules for debt recovery. Any surplus from the sale proceeds exceeding the satisfaction amounts stipulated in the preceding paragraph shall be returned to the debtor or grantor, as applicable.

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Article ( 26 )
The enforcement judge at the competent court may, upon request by the debtor, grantor, or any other right holder on the movable, decide to suspend enforcement procedures on the movable and its sale at any stage of enforcement if they deem that the results of enforcement may become irreparable. In this case, the judge must require the petitioner to provide a cash deposit or bank guarantee of an amount not less than the value of the movable or the total secured debts and obligations, whichever is lower, to ensure any diminution or damage to the movable. The enforcement judge may, upon request by the debtor, grantor, or any other right holder on the movable, modify enforcement procedures at any stage as they deem appropriate if a violation of the enforcement procedures on the secured movable stipulated in this Law and its executive regulations is established.

Article ( 27 )
The debtor, grantor on behalf of the debtor, or any other right holder on the movable may petition the summary relief judge at the competent court to suspend sale procedures at least one working day before the date specified for the sale of the movable, attaching to the petition proof of depositing with the court treasury an amount sufficient to pay the rights of creditors registered in the Register or the remaining balance, as applicable, plus all costs and expenses. Acceptance of the petition shall result in the suspension of sale procedures, and creditors' rights shall be paid according to their ranking, as well as enforcement costs and expenses, from the amounts deposited with the court treasury.

( Chapter Seven )
Penalties
Article ( 28 )
Without prejudice to any harsher penalty stipulated in any other law, imprisonment and a fine equal to the value of the secured debt, not less than one thousand Egyptian pounds, or either of these penalties, shall be imposed on anyone who alters the characteristics or registered description of the secured movable or obscures its data with the intent to harm the creditor. The fine stipulated in the preceding paragraph shall also be imposed on the debtor who violates their obligations under Article (10) of this Law, as well as on the liquidator who violates their obligations under Article (13) of this Law.

Article ( 29 )
Without prejudice to any harsher penalty stipulated in any la