The pledge legislation has significantly changed

Presently, since the lapse of the Law of the Russian Federation «On pledges» of May 29, 1992 No. 2872-1 (as amended on 06.12.2011, with the Amendments and Additions of January 1, 2013) on July 1, 2014 basic standards on pledge are contained in articles 334 - 358.18 of The Civil Code of the Russian Federation (part one) of November 30, 1994 No. 51-FZ (as amended on 31.01.2016) and Federal Law of 16.07.1998 No. 102-FZ (as amended on 05.10.2015) «On hypothecation (mortgage)».

Talking about general innovations, experts note that the pledge is considered as a burden, not as contractual arrangements as it was before.

Now the pledge of personal rights is specified in 8 articles of The Civil Code and 6 articles are devoted to the pledge of rights under a bank account agreement. Handling procedures of the pledge of rights under a bank account agreement are significantly simplified and the efficiency of the pledge as provisional measure was increased.

To the list of regulations for pledge of inventory and pledge of things in a pawnshop the following statements were added: statements on pledge of rights of corporate members, pledge of securities and pledge of exclusionary rights.

Now the change of physical or legal condition of the pledged item doesn’t influence on the pledge. The subject of the pledge can be the property and rights, which are planned to acquire by the pledger in the future. Besides, the pledge value can remain unchanged regardless of the market situation unless otherwise is prescribed by the pledge agreement.

Requirements to the form and terms of the pledge agreement are significantly simplified. To specify the subject of the pledge, content, size and terms of fulfillment of the obligation is not mandatory now. It is possible, if the agreement includes the references to the document in which the obligation was created.

The list of cases, requiring mandatory state registration of a pledge, was expanded. For example, registration of the pledge of property, the rights on which are the subject to state registration, i.e. hypothecation, is mandatory now. Registration of the pledge of participants’ rights in limited liability company, pledge of securities and the pledge of rights under a bank account agreement is also mandatory now.

Finally, the Registry of notifications on a pledge of movable property was created and successfully operates. The Registry maintenance is regulated by the Federal Law «On Foundations of the legislation on the Notary Service» (approved by Supreme Court Of The Russian Federation on 11.02.1993 № 4462-1) (as amended on 29.12.2015) (with the Amendments and Additions, which came into force on 01.01.2016). The implementation of voluntary registration of movable property pledges allows to securely protect the rights of a mortgagee, as well as third parties.