LAW ON PLEDGE
The Law on Pledge also regulates pledging of securities. The Law contains specific provisions that the pledge on securities is supposed to be registered in the Pledge Register. The law states “A non-possessory pledge on securities shall be created by executing a pledge contract and by making an inventory of the pledged securities, without transferring the securities and the rights that derive from these securities, as collateral, to the possession of the pledgee”.
If the pledge is not recorded in the Register of Pledge, the pledge shall not have a character of registered pledge.
With the conversion of securities in the CSD, the pledge on securities will be registered on a separate restricted securities account in the CSD.
The detailed procedure regarding pledging of securities is regulated with an agreement for mutual cooperation concluded between the CSD and the Pledge Register.
The Law prescribes that the data in the Pledge Register are public and accurate and no person may plead that he/she were not introduced with this information. A person that requires information about pledge on securities should address directly to the Register of Pledge, not to the CSD.
Any person has access to the Pledge Register and has the right to obtain information in written, or some other way (by telephone, in electronic form, etc.) Any document issued by the Pledge Register shall be considered as a public record.
The Law also describes the way of deleting pledge from the register: “Upon request from a pledgor, a pledgee shall be obliged to submit a written proof that the obligation is fulfilled”. Afterwards, the Register of Pledge will instruct CSD to delete the pledge registered on securities on the owners account.
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