THE IMPACT OF NEW SYSTEM OF SECURED TRANSACTIONS ON RESPECTIVE OPERATIONS OF FINANCIAL INSTITUTIONS

03 ապրիլի, 2015 թ.
ԱՊԱՀՈՎՎԱԾ ԳՈՐԾԱՐՔՆԵՐԻ ՆՈՐ ՀԱՄԱԿԱՐԳԻ
ԱԶԴԵՑՈՒԹՅՈՒՆԸ ՖԻՆԱՆՍԱԿԱՆ ՀԱՍՏԱՏՈՒԹՅՈՒՆՆԵՐԻ
ՀԱՄԱՊԱՏԱՍԽԱՆ ԳՈՐԾԱՌՈՒՅԹՆԵՐԻ ՎՐԱ
THE IMPACT OF NEW SYSTEM OF SECURED TRANSACTIONS
ON RESPECTIVE OPERATIONS OF FINANCIAL INSTITUTIONS
Conference on Secured Transaction Reform in Armenia
03 April, 2015.

03 ապրիլի, 2015 թ.
Security Agreement
Conclusion of Security Agreement
 The Chapter 14.1. of the Civil Code of the RA does not envisage any requirements
applicable to the security agreement (the agreement based on which the secured
right is created) in contrast to the Chapter 15 (Right of Pledge) which sets clear
rules applicable to the form of pledge agreement.
 The security agreement may be signed as a separate agreement supplementing
the loan agreement (or any other obligation the fulfillment of which is secured by
the secured right).
 The loan agreement containing the description of the collateral as stipulated by
Article 225.1. of the Civil Code of the RA and provisions on the foreclosure of the
collateral may also serve as a security agreement.
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03 ապրիլի, 2015 թ.
Security Agreement
The description of the Collateral in the Security Agreement
• The provisions of the Civil Code of the RA do not set any rules related to the description of
the collateral in the pledge agreement but the financial institutions in practice make the
description of the collateral in pledge agreement specific taking into account also the
complications related to the registration of the right of pledge in moveable property.
 In accordance with Paragraph 6 of Article 225.1 the description of the collateral can be
general or specific (e.g. “all the equipment owned by the borrower” (general) or “the
machinery of ---------model, identification N---------------, date of manufacturing -------------
owned by the borrower ” (specific), etc.).
 In the meantime, when the collateral can be identified by determinative and descriptive
features, the specific description of the collateral is mandatory.
3

03 ապրիլի, 2015 թ.
Registration of Secured Rights
Current Situation
The secured rights (the right of pledge) in moveables are registered in the
registries maintained by the following entities:
 The State Committee of Real Estate Cadastre;
 The Police of RA;
 The Agency of the State Registry of Legal Entities of Ministry of Justice;
 The Ministry of Economy of RA;
 The General Department of Civil Aviation under the Government of RA;
 The Ministry of Agriculture of RA;
 The Ministry of Transport and Communication of RA;
 The Central Bank of RA.
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03 ապրիլի, 2015 թ.
Current Situation
 The majority of registers are not electronic, the lenders have to carry out the
registration of secured rights (the right of pledge) on paper;
 For the registration of secured rights (the right of pledge) it is necessary to
present the agreement and other documents;
 In some cases the registrar have to make judgments regarding the right to
be registered and/or the content of the source of the secured right (the
agreement);
 The registration of the secured rights (the right of pledge) in the moveable
property is done only based of the request of the lender or the borrower.
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03 ապրիլի, 2015 թ.
New procedure of registration (a)
 The registration of secured rights in movable property is carried out only
electronically
 In order to make a registration, it is necessary to fill in the following data in
the secured internet site:
o identification data of the applicant;
o identification data of the secured person (the creditor);
o identification data of the debtor;
o Description of the right to be registered;
o Description of the collateral;
o Terms of the obligation- the amount, maturity;
o List f inventory (if available). 6

03 ապրիլի, 2015 թ.
New procedure of registration (b)
o the list of documents attached to the application;
o the date of application;
o the document proving the payment of the state duty.
 The submitted data are verified by the electronic signature of the applicant;
 If the person presenting the electronic registration does not have an electronic signature the
application shall be submitted through the notary office;
 In case of registration the applicant receives a copy of the electronic record, which contains
the registration number, date and hour;
 The registration is effective during the period mentioned in it.
7

03 ապրիլի, 2015 թ.
New procedure of registration (c)
 Registration in the registry is in force within the specified period;
 The registration may be extended by submitting of a continuation
application before its expiry;
 The registration shall cease to be effective on the expiration of registration
period or before that based on the application of the secured creditor or
court judgment;
 The debtor may present an objection with regard the secured right
registered in relation to the debtor by submitting an objection notice which
is registered with the secured right.
8

03 ապրիլի, 2015 թ.
Receipt of information form the uniform registry of secured rights
Current situation
 Information on registered secured rights in movable property is provided
mainly in paper form based on the application;
 Information is provided mainly to the parties to the agreement (pledger and
pledgee);
 Information is provided within certain time period (e.g. within 1-2 working
days) which creates obstacles for lenders to organize effectively the lending
process;
 The provision of information is subject to a payment;
 The provision of information within certain period of time may also create
legal risks for the lenders.
9

03 ապրիլի, 2015 թ.
Receipt of information form the uniform registry of secured rights
New procedure of obtaining information
 Information available in the electronic online registry of secured rights in
movables is accessible for the general public;
 Information is accessible free of charge and is provided immediately;
 Everyone can make a search of information on registered secured rights in
movable property by entering the correct name of the debtor, the description
of the collateral or the registration number of the secured right;
 Information can be provided also in paper copies which will be subject to a
payment in the amount set by the Government of RA;
 In paper copy also information is provided immediately upon resorting the
authorized agency. 10

03 ապրիլի, 2015 թ.
Other issues related to the introduction of the uniform registry of
secured rights in movable property
 All the registrations of secured rights in movable property made before the
enactment of the Law “On Registration of Secured Rights in Movable
Property” (October 01,2015) shall keep their legal force.
 Information on the rights registered before the enactment of the law shall be
accessible also in the uniform online registry of secured rights in movable
property.
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03 ապրիլի, 2015 թ.
Other issues related to the introduction of the uniform registry of secured
rights in movable property
“Restrictions”
 In accordance with the amendments made in the law of RA “On Taxes” the tax authorities
may apply restriction on the movable property of the taxpayer for securing the
implementation of obligations related to the revenues controlled by tax authorities in order to
get priority over other creditors of the taxpayer. The restriction is subject to be registered in
the uniform registry of secured rights in movables.
 The order of satisfaction of claims of creditors of the taxpayer related to the application of
the restriction is determined by the rules set in the Chapter 14.1 of the Civil Code of RA.
 A similar change was made also in the Law of RA “On Compulsory Enforcement of Judicial
Acts”, which envisages the application of “the restriction” as an enforcement action. In this
case also the rules related to priorities of receiving satisfaction from the value of the
collateral shall be determined in accordance with the procedure set by the Chapter 14.1 of
the Civil Code of RA.
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03 ապրիլի, 2015 թ. ԱՊԱՀՈՎՎԱԾԳՈՐԾԱՐՔՆԵՐԻՆՈՐՀԱՄԱԿԱՐԳԻ
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THE IMPACT OF NEW SYSTEM OF SECURED TRANSACTIONS ON RESPECTIVE OPERATIONS OF FINANCIAL INSTITUTIONS

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THE IMPACT OF NEW SYSTEM OF SECURED TRANSACTIONS ON RESPECTIVE OPERATIONS OF FINANCIAL INSTITUTIONS