Registered Pledges Act — collateral over a business's movable assets

When a business secures a loan or other obligation not with real estate but with a going concern, stock, receivables or equipment, the applicable mechanism is the registered pledge — governed by a dedicated statute, distinct from the classic mortgage.

What can be the subject of a registered pledge

• The debtor's going concern, as a set of rights, obligations and factual relations.
• Movable property — equipment, machinery, vehicles, stock on hand or future goods.
• The debtor's receivables from third parties (e.g. under client contracts).
• Dematerialised securities and shares in companies.

Creation and registration

A registered pledge is created by a written agreement and takes effect against third parties from the moment it is entered in the Central Register of Registered Pledges, kept by the Ministry of Justice — unlike a mortgage, which is entered in the property register at the location of the real estate.

Specifics of pledging a going concern

Where the whole going concern is pledged, the debtor as a rule retains the right to manage and dispose of the included assets in the ordinary course of business until it falls into default — a flexibility that makes this form of security particularly suitable for bank financing of working capital.

Order of satisfaction where there are several pledges

Where several registered pledges are created over the same property, the order in which creditors are satisfied is determined by the order of registration in the Central Register — the first registered pledgee ranks ahead of those registered later.

Conclusion

The registered pledge is a flexible instrument for securing business finance without tying up real estate — but it requires proper registration and regular checks of the register to guarantee the real value of the security.

Registered pledge versus mortgage — at a glance

Frequently asked questions