Building a vibrant society is one of the pillars of Vision Egypt 2030, as the vision adopts building a vibrant and diversified economy, and works to develop promising industries, attract investments, provide growth opportunities for entrepreneurs, and job opportunities for individuals, so the Egyptian government sought to create a flexible and open economic environment that attracts foreign investments, and supports local talents through clear legislation and regulations that motivate entrepreneurs to participate effectively, by providing all facilities to support and finance their small and large investment projects, therefore, the Egyptian government issued ” Movable Collateral Law ” No. 115 of 2015 on, regulating the use of movable assets as collateral to obtain the required investment financing.

There is no successful investment without strong establishment, sound planning and full support from the state and its various bodies, and the law regulating movable collateral was the golden opportunity that opened the way for many banks and financial institutions to provide full investment support for various projects and companies, especially startups, as the provisions of the Movable Collateral Law apply to rights secured by movables in the possession of the debtor or the guarantee provider, without prejudice to the provisions governing special types of mortgages on movables, including possessory mortgages under the Civil Code, commercial premises mortgages, and securities mortgages.

Movable Collateral Law and its important provisions

Pursuant to the provisions of the Movable Collateral Law and the decisions issued in implementation thereof, and in accordance with Article (2), these provisions shall apply to rights secured by movables in the possession of the debtor or the guarantee provider, and the parties to the security agreement shall agree on its publicity in accordance with the provisions of this Law, including the following:

  1. Rights arising from the sale of movables subject to the condition that ownership is transferred upon full payment of the price.
  2. Rights arising from the sale of movables subject to the right of repossession or repurchase upon the debtor’s default.
  3. Rights arising from the use of or licensing of intellectual property rights.

The provisions of this law regarding the enforceability of a security right against third parties, priority, and execution against the secured movable property shall apply to the following rights:

  1. The creditor’s right in a pledge.
  2. The lessor’s right in a financial or operating lease exceeding six months.
  3. The seller’s right in the sale fee.
  4. The creditor’s right in a pledge of a commercial premises in the event of its publicity in accordance with the provisions of this law.

While the provisions of the Movable Collateral Law shall not apply to rights arising from a pledge of securities, nor to rights arising from future movable property resulting from inheritance, bequest, pensions, life insurance policies, compensation claims, maintenance, wages, or salaries, all in accordance with the rules specified in the executive regulations.

The secured creditor may register their pledge in the register, provided that this does not infringe upon the enforceability of the right against third parties in accordance with the provisions of the Civil Code. In the event of publicity, the provisions of this law relating to priority and execution shall apply to such pledge.

Pursuant to Article (3), certain movable property cannot be subject to a security interest, including the following:

  1. Movable property owned by the state, religious endowments authorities, or foreign embassies and bodies enjoying immunity.
  2. Privileges and licenses granted by the state, public authorities, or public legal persons.
  3. Movable property owned by banks, except for equipment necessary for their operations to finance their purchase.
  4. Movable property intended for personal or household use, except for financing its purchase.
  5. Movable property owned in common, unless all co-owners’ consent to the creation of a security interest.

According to Article (8) of the Movable Collateral Law No. (115) of 2015, stipulates that there are specific conditions for the guarantee right, and these conditions are represented in the following points:

(1) The following requirements must be met for the creation and enforceability of a security interest between the parties:

  1. A security agreement must be executed in a customary or official document, and may also be executed electronically in accordance with Law No. 15 of 2004.
  2. The grantor of the security interest must be authorized to create such interest in the secured movable property.
  3. The creditor must be obligated to provide the agreed-upon financing or consideration for the creation of the security interest.

(2) The security agreement must include at least the following terms:

  1. A general or specific description of the secured movable property, provided that the description must be specific if the collateral consists of used items intended for personal or household purposes.
  2. The duration of the security interest.
  3. The debtor’s or grantor’s acceptance of the registration of the security interest.

The parties to the security agreement may include any commercial terms they deem appropriate, including the following:

  1. The debtor or possessor’s obligation to take all necessary measures and steps to preserve, maintain, or care for the secured movable property.
  2. The debtor’s obligation to use, maintain, and repair the secured movable property in accordance with the purposes for which it was intended and in accordance with generally accepted technical standards and agreed-upon technical specifications.
  3. The debtor’s obligation to notify the creditor of any defects in the secured movable property that prevent its full or partial use.
  4. The extent of the creditor’s authority to monitor the debtor’s compliance with the use of the secured movable property for its intended purpose and to preserve and maintain it.
  5. Priority for the sale of the secured movable property in the event of the debtor’s default.

The competent administrative authority shall make a standard security agreement form available on its website free of charge.

(3) Pursuant to Article (9), more than one security interest may be created over a single movable property, and the security agreement may include more than one secured movable property or a group of changing movable properties.

(4) Under Article (18) of this Law, a security agreement shall be deemed to include any in-kind or monetary consideration resulting from the sale of the secured property, its use, its replacement, or compensation for its loss or damage. It shall also include the proceeds or income generated by the movable property or the proceeds of its exploitation to satisfy the creditor’s rights under the security agreement, unless otherwise agreed in the security agreement.

In case of insurance of the movable property or its loss, the creditor shall have the same rights and privileges over the amounts resulting from the insurance or the right accruing to the owner of the property as compensation if the cause of entitlement is realized, as it had over the insured or lost movable property.

  • Additionally, Article No. (10) of the Movable Collateral Law stipulates that the movable property shall be considered a trust in the hands of the debtor or grantor under the security agreement until its expiration, and they shall exercise ordinary care to preserve and maintain it in a manner commensurate with its nature.

For more information, contact the “Consortio Law Firm” special team now through the phone number 002 01028806061 or via WhatsApp or email Info@consortiolawfirm.com.