Law No. 6/2025 of July 30 on the Legal Regime of Movable Property Security Interests

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Série I, N.° 31 B Quarta-Feira, 30 de Julho de 2025 Página 1 Número Extraordinário $ 1.00 PUBLICAÇÃO OFICIAL DA REPÚBLICA DEMOCRÁTICA DE TIMOR - LESTE Quarta-Feira, 30 de Julho de 2025 Série I, N.° 31 B SUMMARY NATIONAL PARLIAMENT:
Law No. 6/2025 of July 30
Legal Regime of Movable Property Security Interests ......................... 1

LAW NO. 6/2025 of July 30
LEGAL REGIME OF MOVABLE PROPERTY SECURITY INTERESTS

With a view to creating an environment favorable to private investment and, through this, to the economic development of the country, this law aims to achieve the following objectives:
a) promote the granting of low-cost credit, increasing the availability of secured credit; b) allow debtors to use the full value of their assets to secure the granting of credit; c) enable the creation of security rights in a simple and efficient manner; d) treat uniformly the different types of financiers and the various forms and contractual modalities of credit granting; e) allow the creation of security rights without dispossession of the grantor regarding all types of assets; f) increase certainty and transparency, through the registration of information relating to security rights in a general registry of security rights; g) establish priority rules that resolve, with a high degree of certainty and normative predictability, conflicts between different security rights affecting the same asset; h) facilitate the efficient enforcement of a secured creditor's rights in the event of the debtor's default; i) expand the scope of party autonomy in stipulating the content of the security agreement; j) balance the interests of all persons involved in the contractual creation of security rights, namely the debtor/grantor, the secured creditor, and third parties.

In order to achieve these objectives, this law establishes the general regime of contracts through which parties create security interests in movable property, regardless of their specific configuration, whether it be pledge, financial leasing, assignment of credits, or any other type of security that the parties, in the exercise of their autonomy, wish to create.

The normative content of the proposed instrument comprises five essential matters: (i) the regulation of the contract itself through which the security right is created, establishing its conditions of validity and determining the rights and obligations of the parties; (ii) the definition of the modes through which security interests become effective against third parties – these modes being possession of the asset subject to the security, the registration of information relating to the security in the Central Registry of Information on Movable Property Security Interests or in a specialized registry that may exist; (iii) the creation of the Central Registry of Information on Movable Property Security Interests and the regulation of the registration of information relating to the creation, modification, and extinction of security rights; (iv) the definition of priority rules that determine which right prevails when several incompatible rights simultaneously affect the same asset; (v) the regulation of the enforcement of security interests in the event of the debtor's default and insolvency.

One of the most innovative aspects of the law is the creation of the Central Registry of Information on Movable Property Security Interests, operating electronically, online, and accessible to the public, where a creditor can submit information to alert other potential creditors (as well as other third parties) to the possible existence of a security right, ensuring, on the other hand, that such a right, if it really exists, is effective against third parties. The registration process will be fast, automatic, simple, and inexpensive, with characteristics different from the real estate registration process.

Any potential creditor interested in creating a security right over a specific asset can consult the Central Registry of Information on Movable Property Security Interests for information indexed by the name of the grantor, in order to verify whether the asset in question is or is not encumbered with security rights created by it. The grantor will normally also be the debtor, but it is possible that it is a third party who allocates a specific asset to the fulfillment of the obligation.

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The Central Registry of Information on Movable Property Security Interests will be available 24 hours a day, 7 days a week, and may be consulted by any person. The Central Registry of Information on Movable Property Security Interests is intended to provide a mechanism through which secured creditors can make their security right effective against third parties, allowing the registration of information revealing the possible existence of security rights and establishing priorities between creditors and between them and other categories of third parties. This is not a registry of rights, nor even a registry of legal facts regarding certain assets, as is the case with the current real estate registry. The (automated) registration of information is therefore not subject to any prior legality control, nor does it give rise to any administrative act.

Another striking feature of the law is the innovative regime for the enforcement of security interests in the event of the debtor's default. In principle, creditors are only willing to grant credit if they can rely on the recovery of what is owed to them in the event of default. Under the current law, a creditor who wishes to enforce a security and faces resistance from the debtor has no other lawful alternative other than the judicial route, which is usually slow and expensive. This limitation discourages the granting of credit. With the law now approved, the creditor (who remains entitled to resort to the courts, if that is their preference) can now enforce their security right, executing it extrajudicially, through a procedure that, being faster and more expeditious, does not fail to ensure respect for the rights of the debtor/grantor and other creditors, in particular other secured creditors.

Thus, the National Parliament decrees, in accordance with paragraph e) of paragraph 2 of Article 95 of the Constitution of the Republic, to have the force of law, the following:

CHAPTER I
GENERAL PROVISIONS

Article 1.
Object

This law establishes the legal regime for the use of movable property as security for the fulfillment of obligations, establishing the effectiveness, priority, and enforcement of security rights over movable property.
This law also creates the Central Registry of Information on Movable Property Security Interests.

Article 2.
Scope of Application

This law applies to security rights over movable property, corporeal or incorporeal, created to ensure the fulfillment of obligations, regulating their effectiveness, priority, and enforcement, provided that:
a) The corporeal movable asset is located in national territory at the time of the creation of the security right; or b) The incorporeal movable asset has as grantor a person domiciled in Timor-Leste at the time of the creation of the security right.
This law also applies, exclusively for the purposes of registration in the Central Registry of Information on Movable Property Security Interests, to security rights created by law or judicial decision, when such registration is determined.
With the exception of Articles 59 to 70, this law also applies to definitive conventional assignments of receivables without a security function.
The following security rights are excluded from the scope of this law:
a) Consumer goods, except when encumbered by a financed acquisition security; b) Corporate shares, in accordance with Article 41 of the New Law of Commercial Companies.

Article 3.
Definitions

For the purposes of this law, the following are understood by:
a) "Security Agreement", the agreement, regardless of whether the parties designate it as such, concluded between the grantor and the secured creditor through which a security right is created, including the definitive conventional assignment without a security function of receivables; b) "Consumer goods", any goods used or intended to be used exclusively for personal, family, or domestic purposes; c) "Goods derived from the asset subject to security", any goods that have their origin:
i) In the asset subject to a security right, including what is received as a result of a sale or alienation by other means, lease, license, substitution, or enforcement of the object of the security, civil and natural fruits, insurance credits, amounts paid by way of compensation for damage, loss, prejudice, or lost profits caused to the object of the security; ii) In and goods that, in turn, have their origin in the derivative goods referred to in the previous sub-paragraph (derivative goods of derivative goods); d) "Incorporeal movable asset", any movable asset insusceptible of being apprehended by the senses, namely rights and other legal positions and creations subject to intellectual property; e) "Movable asset", the movable thing, in accordance with Article 196 of the Civil Code, including however:
(i) Agricultural products in the process of formation and growth; (ii) Trees to be felled and fruits to be harvested; (iii) Incorporeal assets, including intellectual property rights; (iv) Integral parts of immovable assets; (v) Negotiable instruments, investment securities, and negotiable titles; f) "Corporeal movable asset", the tangible movable asset, including money, negotiable instruments, investment securities, and negotiable titles, without prejudice to the provisions of paragraph 2; g) "Receivable", the right to the fulfillment of a monetary obligation, excluding the right to a payment emerging from a negotiable instrument, the right to a payment of funds credited in a bank account, and the right to a payment emerging from an investment security; h) "Secured creditor", the creditor holder of a right secured by movable property; i) "Security Right":
i) The right over movable property created through an agreement intended substantially to guarantee the fulfillment of an obligation, monetary or of any other nature, regardless of the designation given by the parties, allowing the creditor to be paid with priority from the value of the asset, in the event of maturity or default of the guaranteed obligation, namely pledge, pledge in favor of a pawnshop, movable mortgage, financial leasing, assignment of credits in security, lease agreement with option to purchase, sale with reservation of ownership, consignment by way of security, and any other legal transaction whose substance is the creation of a security over a movable asset; ii) The right of the assignee of a receivable resulting from a definitive conventional assignment without a security function; j) "Grantor", the natural or legal person, whether the debtor themselves or a third party, who creates in favor of the secured creditor a security right; k) "Financed Acquisition Security", the security right that affects the very asset whose acquisition is financed by the creditor, including cases where the creditor is the seller, supplier, financial lessor, or lender who advances funds specifically intended to finance the acquisition; l) "Mass of goods", the movable asset that results from the incorporation of several movable assets of the same nature, these losing their own identity; m) "Obligor", the debtor of the receivable that is the object of a security right; n) "Integral part" of an immovable asset, the movable thing, in accordance with paragraph 3 of Article 195 of the Civil Code, that is attached, fixed, or materially linked to the property, with a character of permanence, intended to satisfy permanent needs of the property and in which the link has no defined temporal limit, other than that resulting from the laws of physics, which is not part of the structure of the property but increases its utility, serving to make the property more productive, safer, more comfortable, or more beautiful, such as tiles, roofing, central air conditioning installation, elevator, and solar panel. o) "Possession", the effective possession of a movable asset by a person or by their representative; p) "Product", the movable asset that results from the physical joining or union of a corporeal movable asset with one or more other corporeal movable assets or other processes, such as manufacturing, assembly, or transformation, in such a way that the assets involved in these processes lose their own identity; q) "Registration", the storage in the database of the Central Registry of Information on Movable Property Security Interests of the information for registration submitted to it; r) "Public Access Registry", the part of the database of the Central Registry of Information on Movable Property Security Interests accessible to the public through search.
The reference to "corporeal movable assets" in paragraph f) of the previous number, as well as in Article 16, does not include money, negotiable instruments, and negotiable titles.

Article 4.
Party Autonomy and General Rules of Conduct

The provisions inserted in Chapters II, III, V, and VI, with the exception of Article 54 and paragraph 2 of Article 58, are of a supplementary nature, and the parties may, by agreement in writing, stipulate differently.
The agreement referred to in the previous number is ineffective with respect to those who are not parties to it.
The rights provided for in this law must be exercised and the obligations provided for in it fulfilled in good faith and on terms that are commercially reasonable.

CHAPTER II
CREATION OF THE SECURITY RIGHT

Article 5.
Requirements of the Security Agreement and Creation of the Security Right

The security right is created through a security agreement.

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The security agreement effectively creates the security right if:
a) The grantor has over the asset subject to the security some right on the basis of which they can legitimately create the security right; b) It is concluded in writing and signed by the secured creditor and the grantor; c) It identifies the secured creditor and the grantor and indicates their respective addresses; and d) It describes the asset subject to the security and the guaranteed obligation in a manner that allows for its reasonable identification.
For the purposes of the previous number, it is considered sufficient that the description of the asset subject to the security be made by reference to all movable assets of the grantor, present or future, or to a type of movable assets, without it being necessary to specifically individualize each of them.
It is also considered sufficient, for the purposes of paragraph 2, the description of the asset subject to the security or part of it by indicating a serial number that serves to identify it.
It is also considered sufficient, for the purposes of paragraph 2, that the description of the guaranteed obligation consists of a reference to all obligations, present and future, of the debtor towards the secured creditor.
The description of the guaranteed obligations is not necessary when the security agreement refers to a definitive conventional assignment without a security function of receivables.
The security right may secure the fulfillment of one or more obligations of any type, present or future, determined or determinable, conditional or unconditional, fixed or variable.
The security may be constituted over:
a) Any movable asset, corporeal or incorporeal; b) Any right over a movable asset susceptible of transmission, including undivided right or a share of co-ownership or community; c) A type of movable assets; and d) All movable assets of the grantor.
Imprescriptible or inalienable assets under the law cannot be the object of security.
The security agreement may provide for the creation of a security right over a future asset, with the right being constituted when the asset comes into existence or, if the asset already exists, when the grantor acquires over it some right that legitimizes them to create the security right.

Article 6.
Security Right over Derivative Goods

The security right extends to the goods derived from the asset subject to the security.

Article 7.
Goods Incorporated into a Mass of Goods or a Product

The security right over goods incorporated into a mass of goods automatically converts into a security right over that mass of goods, without the need for any contractual addendum or additional act of another nature, but limited to the proportion with which the quantity of assets subject to security contributed to the mass at the time of incorporation.
The security right over goods that are incorporated into a product automatically converts into a security right over that product, without the need for any contractual addendum or additional act of another nature, but limited to the value of the encumbered asset immediately before it becomes part of the said product.

Article 8.
Goods that Become Integral Parts

The security right over movable assets that become integral parts of an immovable asset remains after integration.

Article 9.
Goods that Become Accessory Things

The security right over movable assets that become accessory things remains after their allocation to the principal thing.

Article 10.
Extinction of the Security Right

The security right is extinguished when all guaranteed obligations have been fulfilled or extinguished by other means, provided that the creditor is not still obliged, notably through a credit opening contract, to grant credit that gives rise to new obligations covered by the security right.

Article 11.
Contractual Limitations on the Creation of Security Rights over Receivables

Any provisions contained in the contractual conditions of the receivable that aim to prevent or limit the creation of a security right over the same are not opposable to the secured creditor nor constitute an impediment to the creation of a security right over a receivable.
Neither the grantor nor the secured creditor incurs liability for breach of the contractual limitations referred to in the previous number vis-à-vis the obligor, who, moreover, is not exempt from the duty to satisfy the receivable over which the security affects.
The provisions of the previous numbers apply only to the receivable that constitutes a monetary obligation resulting from sales, lease, or service contracts.

Article 12.
Right to Payment of Funds Credited in a Bank Account

The creation of a security right affecting a receivable that has as its object the payment of funds credited in a bank account is not obstructed by any agreement between the grantor and the bank that limits in any way the right of the former to create a security right.

Article 13.
Negotiable Instruments

The security right that has as its object a negotiable instrument covers the assets subject to the right incorporated in the instrument.

CHAPTER III
EFFECTIVENESS OF THE SECURITY RIGHT AGAINST THIRD PARTIES

Article 14.
Effectiveness vis-à-vis Third Parties

The security right is opposable to third parties:
a) If the initial registration information relating to it is introduced into the public access registry; b) If the secured creditor is in possession of the assets that are its object; c) If it is registered in a specialized registry referring to certain types of assets or rights.
Competing creditors are considered third parties, for the purposes of the provisions of this article.

Article 15.
Effectiveness against Third Parties of the Security Right over Derivative Goods of the Asset Subject to Security

The effectiveness against third parties of the security right extends automatically, without the need for any other act, to the rights over goods derived from the asset subject to the security, in accordance with the provisions of Article 6, provided that these consist of currency, receivables, negotiable instruments, or rights to the payment of funds credited in a bank account.
When, in accordance with the provisions of Article 6, the security right affects goods derived from the asset subject to the security other than those referred to in the previous number, the security right over such derivative goods is effective against third parties:
a) For 20 days after their emergence; b) Subsequently, only if the security right over the derivative goods becomes autonomously effective against third parties, through one of the modes referred to in Article 14, before the end of the period specified in the previous sub-paragraph.

Article 16.
Effectiveness against Third Parties of the Security Right over Goods Incorporated into a Mass of Goods or a Product

If a security right affecting corporeal movable assets is effective against third parties and the same converts, in accordance with Article 7, into a security right affecting a mass of goods or product, it automatically becomes effective against third parties, without the need for any additional act.

Article 17.
Effectiveness against Third Parties of Security Rights over Goods that Become Integral Parts

If any asset becomes an integral part and the security right over the asset is opposable to third parties at the time of integration, the security right continues to be effective against third parties after that integration.

Article 18.
Security Rights over Goods that Become Accessory Things

If any asset becomes an accessory thing and the security right over the asset is opposable to third parties at the time of allocation to the principal thing, the security right continues to be effective against third parties after that allocation.

Article 19.
Financed Acquisition Security over Consumer Goods

The financed acquisition security right affecting consumer goods is effective against third parties from the moment of its creation, without the need for any other act, without prejudice to the provisions of paragraph 2 of Article 42.

Article 20.
Security Rights over Negotiable Instruments

If the security right over a negotiable instrument is opposable to third parties, the security right that extends to the corporeal movable asset covered by the instrument, in accordance with Article 13, is also effective against third parties.

CHAPTER IV
CENTRAL REGISTRY OF INFORMATION ON MOVABLE PROPERTY SECURITY INTERESTS
Section I
General Provision

Article 21.
Operation of the Central Registry of Information on Movable Property Security Interests

The Central Bank of Timor-Leste (BCTL) installs, operates, and

Republic Journal
Series I, No. 31 B Wednesday, July 30, 2025 Page 6 maintains in operation the Central Registry of Information on Movable Property Security Interests provided for in this law.

The Central Registry of Information on Movable Property Security Interests is a public registry service, of an electronic and automated nature, made available through an online platform and intended to fulfill the functions provided for in this law.
The creation of the Central Registry of Information on Movable Property Security Interests does not affect the attributions of other State services responsible for public registries established by law, nor the competences of their respective bodies.
The date for the start of operation of the Central Registry of Information on Movable Property Security Interests is communicated by circular issued by the BCTL.

Section II
Registry

Article 22.
Purpose, object and effects of the registry

The Central Registry of Information on Movable Property Security Interests aims to give publicity to the creation, modification and extinction of security rights by the grantor, attributing to them effectiveness against third parties through this publicity.
The registration of information consists of the simple storage and publication of information by the secured creditor regarding the security rights referred to therein, not being a constitutive act of the security right nor creating a presumption of its existence.
The storage and publication of information for registration submitted by the secured creditor is not preceded by nor dependent on any control of the legality, validity or effectiveness of the facts or documents that may be the origin of the security rights to which they refer.
The Central Registry of Information on Movable Property Security Interests does not guarantee the accuracy, reliability, consistency or authenticity of the registered information, which is the exclusive responsibility of the secured creditor who inserted them.

Article 23.
Grantor's authorization for registration

The effectiveness of the registration, consisting in the opposability to third parties of the security right referred to in the information for registration, depends on the authorization of the grantor, given in writing.
The effectiveness of the registration of the information of alteration that adds assets to the object of the security or prolongs the period of effectiveness of the registration of the information depends equally on the authorization of the grantor, given in writing.
The effectiveness of the registration of the information of alteration that adds a grantor depends on the authorization, given in writing, of the added grantor.
Any of the authorizations referred to in the preceding paragraphs may be given before or after the registration of the information for registration to which it refers.
A security agreement reduced to writing is sufficient to satisfy the requirement of the grantor's authorization.
It is not required of the secured creditor who submits the information for registration to present the document proving the grantor's authorization.

Article 24.
Sufficiency of a single information for registration for several security rights

One information for registration may simultaneously cover several security rights, emerging from one or more security agreements.

Article 25.
Prior registration

The information for registration may be registered before the creation of the security right to which it refers, including before the conclusion of any security agreement.

Article 26.
Production of effectiveness of the registration of information

The registration of an initial information or an information of alteration produces effects from the date and time when they become accessible, through search by any interested party, in the public access registry.
The registration of a cancellation information produces effects from the date and time when the information to which it refers ceases to be accessible, through search by any interested party, in the public access registry.

Article 27.
Period of effectiveness of the registration of an information for registration

The registration of an initial information is effective for the time set by the secured creditor in the corresponding field of the electronic form, not exceeding five years.
The period of effectiveness of the registration of an initial information may be extended up to 90 days before its expiry, by means of the submission of an information of alteration that indicates, in the corresponding field of the electronic form, the duration of the extension, which cannot exceed the maximum duration of five years.
The period of effectiveness may be extended more than once, without limit of extensions.
The registration of an information of alteration for extension of the initial period extends the effectiveness of the initial information from the moment when the current period would have expired if the information of alteration had not been registered.

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Article 28.
Mandatory submission of an information of alteration or cancellation

The secured creditor must submit for registration an information of alteration that suppresses an asset from the description of the asset subject to the security whenever:
a) The grantor has not authorized the introduction of an information for registration relating to that asset and the secured creditor has been informed by him that he will not authorize such registration; b) The grantor revokes the authorization that he had previously given for the introduction of an information for registration relating to that asset, provided that no security agreement relating to that asset has been concluded; or c) The security agreement to which the registered information refers has been modified in such a way as to release that asset from the security right that affected it.
The secured creditor must submit for registration a cancellation information whenever:
a) The registration of the initial information was not authorized by the grantor and the secured creditor has been informed by him that he will not authorize the registration of the initial information; b) The grantor revokes the authorization that he had previously given for the registration of an initial information, provided that no security agreement has been concluded; or c) The security right to which the information refers has been extinguished.
The secured creditor cannot demand or accept any amount for compliance with the obligations imposed in letters a) and b) of paragraph 1 and a) and b) of paragraph 2.
If the conditions provided for in paragraphs 1 and 2 are met, the grantor may request the secured creditor, in writing, properly identifying himself and identifying the initial information in question, to submit for registration the appropriate information of alteration or cancellation.
The secured creditor cannot demand or accept any amount for the satisfaction of the grantor's request made under the terms of the preceding paragraph.

Article 29.
Autonomous action for alteration or cancellation of registry

If the secured creditor does not comply with the grantor's request under the terms of paragraph 4 of the preceding article within five business days after its receipt, the grantor may request the competent court to summon the secured creditor to register the information of alteration or cancellation, within five business days.
The process is always of an urgent nature, preceding any other non-urgent judicial service, and must be decided in the first instance within a maximum period of 60 days.
The opposition is raised within 10 days and the lack of opposition determines the confession of the facts articulated in the request.
With the petition and the opposition, evidence is offered, and no more than three witnesses may be produced.
The testimonies are recorded if any of the parties has requested recording in the request or in the opposition.
Once the opposition is presented, when necessary, the evidence requested or officially determined by the judge is produced.
The final hearing can only be postponed, on a single occasion, in the case of lack of attorney for any of the parties, and must take place within the five subsequent days.
The absence of any summoned person whose testimony is indispensable, as well as the need to carry out any evidentiary diligence during the hearing, only determines the suspension of the hearing at the appropriate time, with a date immediately set for its continuation.
From the decision rendered, an appeal of aggravation lies, with immediate elevation and in the same records, which has a merely devolutive effect.
In case of refusal or non-compliance with the summons within the period fixed by the court, the court may order the Central Registry of Information on Movable Property Security Interests to register the information of alteration or cancellation.
If the action is judged procedent, the responsibility for costs falls exclusively on the secured creditor.

Article 30.
Information of alteration or cancellation not authorized

The effectiveness of the registration of an information of alteration or cancellation does not depend on the authorization of the secured creditor.

Article 31.
Data protection

When collecting or otherwise processing personal data for the purpose of introducing information for registration, the secured creditor only uses the personal data strictly necessary for this purpose, obtaining them directly from the holder of the personal data in question or from a third party who has been duly authorized by him.
The secured creditors and the entity responsible for the Central Registry of Information on Movable Property Security Interests must comply with and observe the legal regime applicable in matters of protection, processing and circulation of personal data, as well as the protection of privacy in the field of electronic communications.

Section III
Errors and alterations after registration

Article 32.
Errors in the information for registration

When an initial or alteration information contains an error in the identification of the grantor, its registration is only ineffective if the error is such that the information for registration cannot be found through a search using the correct identification of the grantor.
Errors in the initial or alteration information that do not relate to the identification of the grantor do not affect the effectiveness of the registration, unless they are capable of materially misleading someone who acts with reasonable diligence when performing a search in the public access registry.
The error in the identification of a grantor does not entail the ineffectiveness of the registration of information with respect to another grantor correctly identified.

Article 33.
Alteration of the grantor's identification after registration of the initial information

The alteration of the grantor's identification after the registration of the initial information does not affect its effectiveness, nor the priority derived from it.

Article 34.
Transmission of the asset subject to the security after registration

The effectiveness against third parties and the priority of a security right resulting from the registration of the corresponding information are not affected by the transmission, after registration, of the asset subject to the security right, the security right continuing, notwithstanding the transmission, to encumber it, without prejudice to the provisions of Article 42.

Article 35.
Management of undue removals in the registration of information

The entity responsible for the Central Registry of Information on Movable Property Security Interests must, ex officio and without delay, restore to the public access registry any data that it has unduly removed from the registered information.
The entity responsible for the Central Registry of Information on Movable Property Security Interests must send a copy of the registered information to anyone identified therein as grantor and secured creditor, within 10 business days after registration or restoration.
When, under paragraph 1, the unduly removed data are restored, the affected information produces effects as if the removal had not occurred.
Without prejudice to the provisions of the preceding paragraph, the security right to which the affected information refers does not enjoy priority over the right of a competing creditor who has, in the meantime, been constituted on the same asset, provided that this one has acted relying on the results of a search carried out in the public access registry before the restoration of the data provided for in paragraph 1 and did not have actual knowledge, at the date when his right was constituted, of its undue removal.

Section IV
Organization of the Central Registry of Information on Movable Property Security Interests and of the public access registry

Article 36.
Computer system for registration of information

The computer system for registration of information on movable property security interests is designed and operated in such a way as to ensure the automatic and immediate insertion of any information for registration as soon as the following conditions are met:
a) Correct completion of all mandatory information fields, through the electronic form; b) Payment of the due fee.
If the information is not immediately registered under the terms of the preceding paragraph, the interested party may request the entity responsible for the Central Registry of Information on Movable Property Security Interests to make the registration within five business days.
After the period provided for in the preceding paragraph has expired, the interested party may, within 10 business days, request the competent court, under the terms provided for in Article 29, to summon the entity responsible for the Central Registry of Information on Movable Property Security Interests to carry out the registration within a maximum period of five business days.

Article 37.
Removal of information from the public access registry and archiving

The entity responsible for the Central Registry of Information on Movable Property Security Interests must remove from the public access registry the information after the expiry of the period of effectiveness of the introduction of the information for registration, in accordance with Article 27, or after the registration of a cancellation information, in accordance with Article 28.
Save for the provisions of the preceding paragraph, the entity responsible for the Central Registry of Information on Movable Property Security Interests cannot remove from the public access registry the information registered therein.
The entity responsible for the Central Registry of Information on Movable Property Security Interests must archive the information removed from the public access registry, in accordance with paragraph 1, for 21 years, in order to ensure, during this period, its recoverability.

Article 38.
Integrity of information in the public access registry

Save for the provisions of Articles 35 and 37, the entity responsible for the Central Registry of Information on Movable Property Security Interests cannot alter or remove from the public access registry data contained in registered information.
The entity responsible for the Central Registry of Information on Movable Property Security Interests must take all reasonable measures to preserve all information contained in the public access registry and to reconstruct it in case of loss or damage.

CHAPTER V
PRIORITY OF THE SECURITY RIGHT

Article 39.
Scope of application

The provisions of this chapter only apply to priority relations between security rights and between them and other rights of third parties constituted by security agreement.
The priority relations between security rights constituted by security agreement and other security rights, notably rights constituted by virtue of the law or by judicial decision, are regulated by the law that specifically provides for them, without prejudice to the provisions of Article 44.

Article 40.
Concurrent security rights on the asset subject to the security

Without prejudice to the provisions of Article 46, the priority between concurrent security rights on the same asset subject to the security is determined according to the following rules:
a) Between security rights that have become effective against third parties through the introduction of the information for registration in the Central Registry of Information on Movable Property Security Interests, priority is determined by the order of registration, regardless of the order of creation of the security rights; and b) Between the security right that has become effective against third parties through registration and the security right that has become effective against third parties through possession, priority is determined by the order of registration or possession, whichever occurred first.

Article 41.
Concurrent security rights on assets derived from the asset subject to the security

A security right on assets derived from the asset subject to the security that is opposable to third parties under Article 15 has the same priority over a concurrent security right as the security right on the object from which they derive.

Article 42.
Concurrent security rights with the rights of buyers or other acquirers or lessees

The security right effective against third parties continues to encumber the asset on which it falls when it is sold or transmitted by any other means or leased, being opposable to the buyer, acquirer or lessee, except when:
a) The secured creditor, by agreement, consents to the release of the asset subject to the security; b) The asset subject to the security is sold, alienated or leased in the normal course of business of the seller, alienator or lessor, provided that, at the time of the conclusion of the sales contract or lease contract, the buyer or lessee did not have actual knowledge of the existence of the security.
Consumer goods are acquired or leased free of any purchase money security interest encumbering them, unless this becomes opposable to third parties, under Article 14, before the conclusion of the sales or lease contract, as the case may be.

Article 43.
Impact of the grantor's insolvency on the priority of a security right

A security right that, under this law, is opposable to third parties at the time of the opening of the grantor's insolvency proceedings continues to be opposable to third parties and maintains the priority it had before the opening of the insolvency proceedings, unless another credit has priority under the legal regime applicable in matters of insolvency.

Article 44.
Concurrent security rights with the right of the attaching creditor

If a lien is placed on the asset subject to the security within the framework of an enforcement proceeding, the right of the creditor with an executive title enjoys priority over the right of the secured creditor if the lien was carried out before the security right became effective against third parties.
If the security right becomes effective against third parties before or at the same time as the asset subject to the security was lien-ed, the security right enjoys priority, but this is limited to the higher of the following values:
a) The value of the credit granted by the secured creditor before he receives written notification that the asset subject to the security has been lien-ed; or

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b) The value of the credit that the secured creditor has promised to grant, under an irrevocable commitment to grant credit in a fixed amount or in an amount to be determined according to a specific formula, if the promise was made before the secured creditor receives written notification that the asset subject to the security has been lien-ed.

Article 45.
Conflict with rights subject to specialized registries

In the event of a conflict between rights subject to information registered in the Central Registry of Information on Movable Property Security Interests and rights subject to specialized registration relating to certain types of movable property, the latter prevail, even if the registration is subsequent.

Article 46.
Purchase money security interest concurrent with security rights of another nature

A purchase money security interest has priority over a security right of another nature that competes with it constituted by the same grantor, provided that:
a) The creditor with the purchase money security interest is in possession of the assets; or b) The initial information relating to the purchase money security right is registered in the public access registry within 15 days after the grantor has obtained possession of the assets.

Article 47.
Security right on component parts

The security right on component parts that becomes opposable to third parties under this law has priority over any security constituted on the immovable property:
a) When the security right under this law becomes opposable to third parties before the security constituted on the immovable property; b) When the security right under this law becomes opposable to third parties before the installation of the component parts on the immovable property.

Article 48.
Security right on accessory thing

Without prejudice to the provisions of this law, a security right on an accessory thing that is opposable to third parties has priority over any security rights that affect the main movable asset.

Article 49.
Future assets

The priority of a security right covers all assets described in the initial or alteration information registered in the public access registry, even if they are assets that come into existence or are acquired by the grantor after registration.

Article 50.
Future obligations

Without prejudice to the provisions of Article 44, the priority of a security right benefits all guaranteed obligations, including obligations constituted after the production of effects of the security right against third parties, whether future obligations or obligations resulting from advances of funds to which the creditor has committed himself in a previous credit grant contract.

Article 51.
Knowledge by the secured creditor of concurrent security rights

The priority of a security right constituted under this law is not affected by any knowledge that the secured creditor may have of a concurrent security right.

Article 52.
Security rights on negotiable instruments

The security right on a negotiable instrument that becomes opposable to third parties by possession thereof has priority over the security right on the same instrument that becomes opposable to third parties by the introduction of an information for registration in the Central Registry of Information on Movable Property Security Interests.
The negotiable instrument is transmitted free of the security rights encumbering it, including those referred to in information for registration introduced in the Central Registry of Information on Movable Property Security Interests, if the acquirer takes possession thereof, upon payment, without having knowledge that the transmission of the instrument violates the rights of the secured creditor under the security agreement.

Article 53.
Cash and funds credited to a bank account

The acquirer who obtains possession of cash values or who receives a transfer of funds credited to a bank account acquires rights over the amount received, subject to no security right, unless he has actual knowledge that the transfer violates the rights of the secured creditor under the security agreement.

Article 54.
Priority of the security right on assets covered by negotiable instruments

The security right on assets opposable to third parties by possession of the negotiable instrument incorporating the right to their delivery has priority over a concurrent security right opposable to third parties by any other method.

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CHAPTER VI
RIGHTS AND OBLIGATIONS OF THE PARTIES AND OBLIGATED THIRD PARTIES

Article 55
Obligation of the secured creditor to return the collateral Upon the extinction of the security interest, the secured creditor who is in possession of the collateral must return the collateral to the grantor or deliver it to a person designated by the grantor.

Article 56
Right of the secured creditor to inspect the collateral The secured creditor who is not in possession of the collateral has the right to inspect it if it is in the possession of the grantor.

Article 57
Right of the grantor to obtain information

Within 10 days of receiving a written request from the grantor to that effect, the secured creditor, except when it is the assignee of a definitive assignment of credit without a security function, must send to the grantor, at the address specified in the request:
a) A statement of the obligation that is secured; and b) An updated description of the collateral.
The secured creditor may charge a commercially reasonable amount for each response to a request, under the terms of the preceding paragraph, considering the resources used in preparing and issuing the requested statement and documents.

Article 58
Bank accounts

The creation of a security interest over a right to payment of funds credited in a bank account:
a) Does not affect the rights and obligations of the bank without its consent; and b) Does not oblige the bank to provide the secured creditor or other third parties with any information about the bank account.
Any set-off rights of the bank over a bank account opened with it are not affected by any security interest that it itself holds over the right to payment of funds credited in the same account.

CHAPTER VII
ENFORCEMENT OF THE SECURITY INTEREST

Article 59
Rights after default

In the event of default, the grantor and the secured creditor have the right to exercise:
a) Any right provided for in the provisions of this chapter; b) Any other right provided for in the security agreement or in any legal provisions, except to the extent that it is incompatible with the provisions of this law.
Before default, the grantor or the debtor cannot unilaterally waive any of their rights arising from the provisions of this chapter, and contracts or clauses that in any way limit or exclude them are null and void.

Article 60
Judicial and extrajudicial enforcement

The secured creditor may exercise its rights after default through judicial means, in accordance with the provisions of this chapter and the Code of Civil Procedure.
The secured creditor may also exercise its rights after default through extrajudicial means, provided that it does so in compliance with the provisions of this chapter.
The security agreement that meets the requirements set out in Article 5 and has been registered in accordance with this law constitutes an enforceable title for the delivery of a specific thing, in accordance with and for the purposes of item c) of paragraph 1 of Article 669 of the Code of Civil Procedure, provided that the enforceable obligation is certain, liquid, and due.

Article 61
Right of affected persons to terminate the enforcement of the security interest

The grantor, any other person with a right over the collateral, or the debtor has the right to terminate the enforcement of the security interest, by paying or fully performing the secured obligation, including:
a) The costs determined by the court, if the secured creditor exercised its rights after default through a judicial process; and b) The reasonable cost of the enforcement of the security interest, if the secured creditor exercised its rights after default through extrajudicial means.
The right to terminate the enforcement may be exercised at any time until the first of the following events:

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Article 62
Right of the senior secured creditor to assume enforcement

Notwithstanding the commencement of enforcement by another creditor, a secured creditor whose security interest has priority over that of the creditor who initiated the enforcement has the right to assume the enforcement at any time, until the first of the following events:
a) The sale or transfer by any other means, acquisition, or collection of the collateral by the creditor who initiated the enforcement of the security interest; or b) The conclusion of an agreement by that creditor for the sale or transfer by any other means of the collateral.
The right of the senior secured creditor to assume enforcement includes the power to enforce by any means permitted to a secured creditor under this law.
This article does not apply if the secured creditor exercises its rights through judicial means.

Article 63
Right of the secured creditor to take possession of the collateral

Without prejudice to the provisions of Articles 700 to 703 of the Code of Civil Procedure and the rights of whoever holds possession that must prevail, the secured creditor, in the event of default, has the right to take possession of the collateral.
The exercise through extrajudicial means of the right provided for in the preceding paragraph depends on the cumulative verification of the following conditions:
a) The grantor has given written consent for the secured creditor to take possession of the collateral through extrajudicial means; b) The secured creditor has notified the grantor and any person in possession of the collateral in writing of the default and its intention to take possession thereof; and c) At the time the secured creditor attempts to take possession of the collateral, the possession can be carried out without the use of force.
The consent referred to in item a) of the preceding paragraph may be provided for in the security agreement.
The notification referred to in item b) of paragraph 2 is not made if the collateral is perishable or susceptible to rapid depreciation.
If a senior secured creditor is in possession of the collateral, the junior secured creditor does not have the right to take possession thereof.

Article 64
Special procedure for appropriation after default

If the secured creditor has the right to take possession of the collateral after default, but its exercise depends on the use of force, the secured creditor may request the competent court to seize the collateral and deliver possession thereof to the secured creditor.
The request referred to in the preceding paragraph must be accompanied by:
a) The security agreement; b) Proof of registration; c) Any additional evidence necessary to demonstrate that the secured obligation is certain, liquid, and due; d) The name and contact information of the grantor; and e) Any elements that may be necessary to locate and effect the seizure of the collateral.
Upon verification of the existence, validity, and effectiveness of the enforceable title in the possession of the secured creditor, the court orders, without prior hearing of the grantor, the seizure and delivery of the collateral to the secured creditor within the period fixed by the court.
The court communicates the seizure and delivery order referred to in the preceding paragraph to the grantor at the time of seizure or, if this is not possible, within a maximum period of five business days, noting the legal period for filing an objection, to be made in accordance with the following paragraph.
The grantor may oppose the seizure and delivery by filing an objection, within a period of 20 days from the communication by the court, following, with due adaptations, the provisions of Articles 694 to 696 of the Code of Civil Procedure.
If the order for seizure and delivery of the collateral to the secured creditor infringes upon the possession or any right incompatible with the realization or scope of the diligence held by a non-party to the case, the injured party may assert this by filing third-party objections, following, with due adaptations, the provisions of Articles 286 to 294 of the Code of Civil Procedure.

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Article 65
Integral parts

Without prejudice to the provisions of Article 63, the secured creditor, after default, may take possession of the collateral if it is an integral part, removing the relevant integral part from the immovable property.
When removing the integral part, the secured creditor must do so in a manner that does not cause more damage to the immovable property than is reasonably necessary.
If the secured creditor removes an integral part, under paragraph 1, it must reimburse any holder of a relevant interest in the immovable property, other than the grantor, for any damage caused to them, except for damages resulting from a reduction in the value of the immovable property due to the absence of the integral part.
The amounts paid as compensation by the secured creditor who acts with reasonable diligence are considered enforcement expenses.

Article 66
Enforcement against accessory items

Without prejudice to the provisions of Article 63, the secured creditor, after default, may take possession of an accessory item that is the subject of the security interest, removing the accessory item from the principal property to which it was attached.
The secured creditor must carry out the appropriation referred to in the preceding paragraph in a manner that does not cause more damage to the principal property than is reasonably necessary.
If the secured creditor removes an accessory item under paragraph 1, it must reimburse any holder of a relevant interest in the principal property, other than the grantor, for any damage caused, except for the damage resulting from a reduction in the value of the principal property resulting from the removal of the accessory item.
The amounts paid as compensation by the secured creditor who acts with reasonable diligence are considered enforcement expenses.

Article 67
Right of the secured creditor to alienate the collateral

After default, the secured creditor has the right to sell or, by any other means, alienate, lease, or license the collateral.
If the secured creditor decides to exercise the right provided for in the preceding paragraph through judicial means, the Code of Civil Procedure applies.
If the secured creditor decides to exercise the right provided for in paragraph 1 through extrajudicial means, it has the power to determine the method, form, time, location, and other relevant aspects for the realization of the sale or other form of alienation, lease, or license, including the possibility of selling or alienating by any other means, leasing, or licensing the collateral, in units, in lots, or in its entirety.
If the secured creditor decides to exercise the right provided for in paragraph 1 through extrajudicial means, it must notify its intention in writing:
a) To the grantor and the debtor; b) To any person with a right over the collateral who informs the secured creditor of that right in writing, at least two days before the notification is sent to the grantor; c) To any other secured creditor who has obtained registration in the Movable Property Security Information Registry of information relating to a security interest over the collateral, at least two days before the notification is sent to the grantor; and d) To any other secured creditor who was in possession of the collateral when the secured creditor took possession thereof.
The notification referred to in the preceding paragraph must be made at least 20 days before the sale or alienation by any other means, lease, or license and must contain:
a) The description of the collateral; b) The statement of the amount necessary, at the time of notification, to satisfy the secured obligation, including interest and reasonable enforcement costs; c) The statement that the grantor, any other person with rights over the collateral, or the debtor has the right to terminate the enforcement process, as provided for in Article 61; and d) The statement of the date from which the collateral will be sold or alienated by any other means, leased, or licensed, or, in the case of a public auction, the date, location, and form of alienation provided for.
The notification referred to in paragraph 4 is not made if the collateral is perishable or susceptible to rapid depreciation.

Article 68
Distribution of the proceeds from the alienation of the collateral and debtor's liability for any remaining debt

If the secured creditor decides to exercise the right provided for in Article 67 through judicial means, the distribution of the proceeds from the sale or alienation by any other means, lease, or license of the collateral is determined by the court, in accordance with the procedural rules in force, observing the provisions of Articles 39 to 54.
If the secured creditor decides to exercise the right provided for in Article 67 through extrajudicial means:
a) The secured creditor who initiated the enforcement must apply the proceeds of the enforcement to the payment of the outstanding balance of the secured obligation, after deducting the expenses reasonably incurred with the enforcement; b) Except in the cases provided for in the following item, the secured creditor who initiated the enforcement must deliver the remainder of the proceeds of the enforcement to any subordinate competing secured creditor who has previously notified it of its credit, up to the amount of that credit, and remit any remaining balance to the grantor; c) When there are two or more subordinate secured creditors who have notified the secured creditor who initiated the enforcement of the existence of their credit, and regardless of whether or not there is any dispute regarding the right or priority of any competing subordinate secured creditor, the secured creditor who initiated the enforcement must deposit any excess amount in a credit institution to the order of the court, following the division in accordance with the procedural rules in force, but observing the provisions of Articles 39 to 54.
The debtor remains liable for any amount that remains in debt after the application of the net proceeds of the enforcement to the payment of the secured obligation.

Article 69
Acquisition of the collateral by the secured creditor

After default, the secured creditor may propose, in writing, the acquisition of one or more components of the collateral for the full or partial satisfaction of the secured obligation.
The secured creditor must send the proposal:
a) To the debtor and the grantor; b) To any person with a right over the collateral who informs the secured creditor of that right in writing, at least two days before the proposal is sent to the grantor; c) To any other secured creditor who has obtained the registration of information relating to the security interest over the collateral, at least two days before the proposal is sent to the grantor; and d) To any other secured creditor who was in possession of the collateral when the secured creditor took possession thereof.
The proposal includes:
a) The indication of the amount necessary, at the time the proposal is presented, to satisfy the secured obligation, including interest and reasonable enforcement costs, as well as the amount of the secured obligation proposed to be satisfied; b) A statement that the secured creditor proposes to acquire the collateral described in the proposal to satisfy the secured obligation in full or in part; c) A statement that the grantor, any other person with rights over the collateral, or the debtor has the right to terminate the enforcement, as provided for in Article 61; d) The indication of the date from which the secured creditor will acquire the collateral.
If, within 10 days of receiving the proposal issued by the secured creditor, it does not receive any written objection from any person entitled to receive the proposal under paragraph 2, the collateral is deemed, for all purposes, acquired by it.
The secured creditor that has presented a proposal for the acquisition of the collateral for the partial satisfaction of the secured obligation only acquires the collateral if it receives written consent from all persons entitled to receive the proposal, under paragraph 2, within 45 days after each of them has received the proposal.
The grantor may request the secured creditor to present a proposal under paragraph 1 and, if the secured creditor accepts the grantor's request, it must proceed in accordance with the provisions of paragraphs 1 to 5.

Article 70
Rights acquired over the collateral

If the secured creditor resorts to judicial means for the sale or alienation by any other form of the collateral, the respective buyer or transferee acquires the collateral, subject to or free of existing encumbrances, as determined by the court.
If the secured creditor sells or alienates the collateral by any other form through extrajudicial means, the buyer or transferee acquires the grantor's right over the collateral free from the rights of the secured creditor enforcing it and of any other competing creditor, except for rights that have priority over the right of the secured creditor enforcing the security interest.
If the secured creditor leases or licenses the collateral through extrajudicial means, the lessee or licensee has the right to the benefit of the lease or license during its term, but their right is not enforceable against creditors with rights that have priority over the right of the secured creditor enforcing the security interest.

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4. If the secured creditor sells or, by any other means, alienates, leases, or licenses the collateral without complying with the provisions of this chapter, the buyer or acquirer by any other means, lessee, or licensee of the collateral acquires the rights or benefits described in paragraphs 2 and 3, provided that they did not have actual knowledge of a violation of the provisions of this chapter that materially prejudiced the rights of the grantor or another person.

Article 71
Enforcement of security over receivables and credit and investment instruments

After default, a secured creditor with a security interest over a receivable, a credit instrument, a right to payment of funds credited in a bank account, or an investment instrument has the right to demand, at any time, as soon as the corresponding obligation becomes due, payment from the obligor of the receivable or credit instrument, to the bank in which the account of the funds credited therein is opened, or to the respective issuer of the investment instrument.
The secured creditor may exercise the collection right provided for in the preceding paragraph before default if the grantor consents.
The secured creditor exercising the collection right under paragraphs 1 or 2 may also enforce any personal or proprietary right that secures or supports the satisfaction of the credit or the right incorporated in the instrument that is the subject of the security interest.
If the security interest consists of the right to payment of funds credited in a bank account, the secured creditor may only collect or enforce its security interest by judicial order, unless otherwise agreed by the institution that received the deposit.
The collection right of the secured creditor, under paragraphs 1 to 4, is subject to the provisions of Article 58.

Article 72
Collection of receivable by the assignee

In the event of a definitive assignment without a security function of a receivable, the assignee has the right to demand payment from the obligor at any time, as soon as the payment becomes due.
The assignee exercising the collection right under the preceding paragraph also has the right to enforce any personal or proprietary right that secures or supports the satisfaction of the credit.
The collection right of the acquirer, under paragraphs 1 and 2, is subject to the provisions of Article 58.

CHAPTER VIII
TRANSITIONAL AND FINAL PROVISIONS

Article 73
Operation of the Movable Property Security Information Registry

Without prejudice to the powers of the Government, the BCTL must issue, within a maximum period of 180 days after the publication of this law, the regulations, instructions, and other acts necessary for its execution, namely for the purpose of installing, operating, and maintaining the Movable Property Security Information Registry, including how the information for registration must be submitted and inserted into the public access registry and how searches can be carried out.
The BCTL approves, within a period of three months from the date of entry into force of this law, a code of good practices to be observed by secured creditors regarding the protection, treatment, and circulation of personal data, in order to ensure an adequate level of personal data protection within the scope of the Movable Property Security Information Registry.

Article 74
Promotion of the objectives of this law
The BCTL adopts the measures it deems appropriate to promote the development in Timor-Leste of markets and financing products that use movable property as collateral, within the limits of its attributions and legal powers.

Article 75
Temporal application

This law applies to security interests created after its entry into force.
Security legal relationships existing on the date of entry into force of this law and any disputes relating to security interests created before that date are governed by the previous applicable legislation.
Without prejudice to the preceding paragraphs, the parties to security agreements existing on the date of entry into force of this law may agree to register them in the Movable Property Security Information Registry, and this law shall apply to them from the date of registration.

Article 76
Subsidiary law
Omissions in these cases are subsidiarily governed by the Civil Code and the Code of Civil Procedure.

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Article 77
Entry into force

Without prejudice to the provisions of the following paragraph, this Law enters into force one year after its publication.
Articles 73 and 74 enter into force the day following the publication of this Law.

Approved on June 17, 2025.

The President of the National Parliament,
Maria Fernanda Lay

Promulgated on July 29, 2025

Publish.

The President of the Republic,
José Ramos-Horta

Law No. 6/2025 of July 30 on the Legal Regime of Movable Property Security Interests

Lineage: In force