Finally, after almost one year from the issuance date of the Law No. 115 of 2015 governing the creation of security over movable assets (the “Movable Securities Law”), the Executive Regulation thereof was recently issued by the Minister of Investment on December 5, 2016 and published in the Official Gazette on December 15, 2016.
For the first time in Egypt and even in the entire Middle East region, according to the Movable Securities Law and its Executive Regulation, the Egyptian Financial Supervisory Authority (“EFSA”) is required to establish an online e-registrar listing all perfected securities over any whatsoever tangible, intangible and future movable assets with some exemptions (the “Movable Securities Registrar”).
The registration with the new Movable Securities Registrar is not mandatory; but, there are a number of legal advantages of the said registration for creditors. For example, the complete and successful registration of any security over an eligible movable asset with the new Movable Securities Registrar grants the first registered creditor a higher-ranking priority than any other secured creditors to be registered following the registration date of the first creditor. Furthermore, the said priory becomes now ahead of any public and/or private ‘preferential rights’ under Egyptian law except for courts’ fee and, therefore, all security interests registered with the new Movable Securities Registrar shall not be subject to the general rule of the ‘preferential rights’, which rule requires that the ‘preferential rights’ shall have priority over any security interest, according to the following order:
- salaries of employees;
- court fees and charges;
- taxes and other governmental charges thereon;
- costs of maintenance of the subject of security;
- hire or lease charges not exceeding the rent of two years; and
- sums due to the seller of the movable that is subject to security.
As per the Minister of Investment’s request, I have recently attended the Ministerial Committee’s meeting to discuss the new Executive Regulation of the Movable Securities Law in attendance of the Chairman of EFSA who indicated that the new Movable Securities Registrar is expected to be established within the next summer.
Currently, EFSA is in the process of issuing the tender documents for engaging one of the leading companies to operate the new Movable Securities Registrar under the subversion of EFSA.
According to EFSA, the new Movable Securities Registrar will be available online to any legal entity with limited access to individuals and the registration of any security thereat will be cost effective than any other regular scheme.