Newsletter-21

271 LAW OF OBLIGATIONS The Code will be applied on the pledged transactions that are formed in order to constitute collaterals on debt, as well as on move- able assets that are secured under the Code. However, it will not be applied on pledge agreements in the capital markets and derivative financial instruments, in addition to the pledges on bank deposits. Similarly, movable assets that are registered with the Land Registry are not covered by the Code. The Code defines the right of a pledge as follows: “A limited real right independent from the type of the moveable pledge, the situation of the pledger or the pledgee, the quality of the debt that was guaran- teed by the pledge or naming of it as a pledge right by the parties; in order to guarantee redemption or fulfillment of a debt, including the right to claim of the transferee during the transfer of the claim without a transfer of possession.” The Code states that the pledge agreement shall be registered and either executed by the signatories in front of a notary public, or in a notarial form, or electronically via registered electronic signatures of the signatories. Also, the Code enables the pledge agreements to be concluded among credit institutions and merchants, craftsmen, farmers, producer organizations, natural and legal persons who are freelancers, and between merchants and/or craftsmen. The movables that are registered with the Land Registry, financial agreements on capital market instruments and derivatives, and pledges on bank deposits are not covered by the Code. The Regulations and Amendments Introduced by the Code The major renovation introduced by the Code is, to enable the establishment of pledges on movables without delivery, and establish- ment of it as a total pledge of a commercial enterprise. In other words, the Code enables the establishment of pledges on movables that are registered to the Movables Registry, without their delivery. As of the entry into force of the Code, to provide publicity and pursuance on movable pledges, and for its application on third parties, the Registry on Pledges of Movables (“Registry”) for pledged mova- bles will be established by the Ministry of Customs and Trade, and all