GETTING CREDIT INDICATOR LEGAL RIGHTS INDEX

Transcription

1 GETTING CREDIT INDICATOR LEGAL RIGHTS INDEX 1

2 REFORMS INTRODUCED SINCE JUNE 01, 2017 Companies Act, 2017 was promulgated on May 30, 2017 and published in the official gazette on May 31, Corporate Rehabilitation Act, 2018 was promulgated on March 13, 2018 and published in the official gazette on March 16, Companies (Registration Offices) Regulations, 2018 have been notified vide S.R.O 76(I)/2018 dated January 25, Draft Corporate Restructuring Companies Rules 2018 have been notified vide S.R.O 35(I)/2018 dated January 17, 2018 for soliciting public opinion.

3 Pakistan-Collateral laws and Collateral Registry Companies Act, 2017, Companies( Registration Offices) Regulations, 2018 and Companies (General Provisions and Forms) Rules, 1985, provides legal framework for creation, publicity and enforcement of security interests over the assets of companies. Securities and Exchange Commission of Pakistan (SECP) is the collateral registry in respect of companies which is maintaining centralized electronic database for security interests granted by companies over their assets.

4 } Security interests (charge) can be registered, rectified, modified online through SECP electronic Portal i.e eservices. Pakistan-Bankruptcy laws Companies Act, 2017, Corporate Rehabilitation Act, 2018, Corporate Restructuring Companies Act, 2016 provides legal framework for winding up, rehabilitation and reorganization of distressed companies.

5 1 There shall be an integrated and unified legal framework for creation, publicity and enforcement of nonpossessory security interests in movable assets: fiduciary transfer of title, financial leases, assignment of receivable and sales with retention of title. Last Year Yes (Correction) Companies Act, 2017 provides a unified legal framework for the incorporated entities. Section of Companies Act, 2017, Form 10,16, 17 of Companies(Gener al Provisions and Forms) Rules, 1985

6 2 Law allows a business to grant a nonpossessory security right in a single category of movable assets (such as machinery or inventory), without requiring a specific description of the collateral. Last Year Yes Yes Section 100 of Companies Act, 2017, Form 10 of Companies(Gener al Provisions and Forms) Rules, 1985

7 3 Law allows a business to grant a nonpossessory security right in substantially all its movable assets, without requiring a specific description of the collateral Last Year Yes Yes Section 100 of Companies Act, 2017, Form 10 of Companies(Gener al Provisions and Forms) Rules, 1985

8 4 Allows security right over future and after acquired assets. Last Year Yes (Correction) Section 100 of Companies Act, 2017, Form 10 of Companies(Gener al Provisions and Forms) Rules, Security rights can be created on all current and future receivables and floating charge on stockin-trade.

9 5 A general description of debts and obligations is permitted in the collateral agreement and in registration documents, all types of debts and obligations can be secured between the parties, and the collateral agreement can include a maximum amount for which the assets are encumbered. Last Year Yes (Correction) Section 100 of Companies Act, 2017, Form 10 of Companies(Gener al Provisions and Forms) Rules, 1985 The companies can create charge on all its book debts, receivables and outstanding monies

10 6 A collateral registry for security interests granted over movable property by incorporated entities is in operation, unified geographically and with an electronic database indexed by debtors names. Last Year Yes (Correction) SECP is collateral Registry for companies. It is maintaining centralized electronic database(unified geographically) accessible to the public. Section 102 of Companies Act, 2017 read with regulation 16 of Companies (Registration Offices) Regulations, 2018

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13 7 The collateral registry is a notice-based registry, does not perform a legal review of the transaction and covers all types of security interest in moveable assets. Last Year Yes (Correction) Section 100 of Companies Act, 2017, Form 10 of Companies(Gener al Provisions and Forms) Rules, 1985

14 8 The collateral registry has modern features such as those that allow secured creditors (or their representatives) to register, search, amend or cancel security interests online. Last Year Yes (Correction) Section 100,106,108,109 of the Companies Act, 2017 read with Form 10,16, 17 of Companies(General Provisions and Forms) Rules, 1985 Security interests (charge) can be registered, rectified, modified online through SECP electronic Portal i.e eservices

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16 9 Secured creditors are paid first (for example, before tax claims and employee claims) when a debtor defaults outside an insolvency procedure. 10 Secured creditors are paid first (for example, before tax claims and employee claims) when a business is liquidated. Section 390 of the Companies Act, 2017 provides priority rankings for different types of claims.

17 11 Secured creditors are subject to an automatic stay on enforcement procedures when a debtor enters a court-supervised reorganization procedure, but the law protects secured creditors rights by providing clear grounds for relief from the automatic stay (for example, if the movable property is in danger) and setting a time limit for it. Last Year Yes (Correction) The judicial reorganization procedure are available in the law. During the reorganization/ winding up proceedings any relevant party including creditor may approach the Court for interim relief.

18 12 The law allows parties to agree in the collateral agreement that the lender may enforce its security right out of court; the law allows public and private auctions and also permits the secured creditor to take the asset in satisfaction of the debt. Last Year Yes (Correction) If the debtor and creditor has agreed to such terms and conditions at the time of entering into security agreement then the law doesn t prohibit any such arrangement.