PLEDGE RIGHT REGISTRATION:
GENERAL ISSUES
Verification of the existence, amount and maturity of the claim secured by the right of pledge
Pursuant to Article 65b of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06), the Registrar is not authorised to verify the existence, amount and maturity of the claim secured by the right of pledge. The Registrar only verifies that the data in the documentation is identical to the data stated in the request, and if this is the case, he/she registers the right of pledge in the Pledge Register.
Maximum amount of the claim
Pursuant to Article 7, Paragraph 2 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06), the right of pledge secures the amount of the principal claim, accrued interest and costs of claim settlement – the maximum amount of the claim. This amount is a mandatory element in registration of the right of pledge in the Register, and it may be expressed in domestic and foreign currency. As regards contractual right of pledge, the parties may determine this amount by the pledge agreement itself.
In case of judicial right of pledge, the court determines the costs of execution by issuing an execution order; however, since the motion for execution submitted by the pledgee, as a rule, seeks enforcement of a debtor’s liability already determined by a court ruling, or an authentic document, which already comprises, in addition to the principal debt, the interest rate and the costs adjudicated in the litigation, the pledgee includes all adjudicated costs in the maximum amount and adds them, together with the interest, to the principal debt.
In the procedure of establishing the statutory right of pledge, the tax administration body in the forced collection procedure calculates, beside the main debt, a special one-off fee for forced tax collection amounting to 5% of the due but unpaid taxes, which is added to the principal debt, as well as the interest rate and the costs incurred by forced collection (field work of the tax collector on the inventory and appraisal of movable assets, seizure, public auction with verbal bidding, witnesses, expert witnesses, etc).
Debt maturity date
Debt maturity date is a material element of the right of pledge and should be specified in the pledge agreement and in the application for registration of the right of pledge. However, if the agreement does not specify the debt maturity date, or if it is not possible to define it, (as the due date of an unpaid instalment, giving rise to maturity of the total secured claim), the debt maturity date does not constitute grounds for not registering the right of pledge without specifying that date. The same date can be disputable in the moment of commencement of the debt settlement procedure.
Pledger’s consent to pledge right registration
The pledger’s consent for registration of the right of pledge in the Pledge Register is required only for pledge arising from an agreement.
For judicial and statutory right of pledge (established in the execution procedure, or the forced collection procedure under the imperative statutory provisions), the pledger’s statement to the effect that he consents to pledge registration in the Pledge Register is not required. The debtor is already evading his/her liabilities, and the pledgee seeks to secure forced settlement of the debtor’s liabilities by a judicial enforcement procedure; the pledger’s consent to registration in the Pledge Register is therefore not required. The same applies for enforced settlement of tax arrears, not settled in the period stipulated by law and therefore settled by forced collection.
The object of pledge may be pledged to several pledgees
A single object of pledge may be pledged to several pledgees. Such a case has implications only for the priority right of settlement, pursuant to Article 30 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06), considering that the order in which the claims are satisfied from the value of the asset in question is determined by the time (day, hour and minute) of receipt of the application for registration of the right of pledge in the Business Registers Agency.
Fee for registration of the right of pledge
The costs of registration of the right of pledge, pursuant to Article 60 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06), are payable by the applicant, or other interested natural or legal entity, and the amount of these costs is determined in accordance with the Rules on the Fees for Services Provided by the Business Registers Agency in Connection with the Register of the Right of Pledge on Movable Assets and Rights (Official Gazette of the Republic of Serbia No. 111/05 and 67/06).
Consent of the Privatization Agency to encumbrance of movable assets by pledge
For encumbrance of movable assets by pledging assets of a business entity, with a majority share of socially-owned capital, consent is required from the Privatization Agency, pursuant to Article 45b of the Law on Business Companies (Official Gazette of the Republic of Serbia No. 125/04), in connection with Article 398a of the Law on Enterprises (Official Gazette of the Federal Republic of Yugoslavia No. 29/96…36/02), which remains in force until expiry of privatization deadlines stipulated by the law governing privatization, as well as Article 11 of the Decree on the Procedure and Method of Restructuring the Entities Liable to Privatization (Official Gazette of the Republic of Serbia No. 52/05). A pledge agreement concluded without the aforesaid consent does not constitute valid legal grounds for registration of the right of pledge.
Business entity deleted from the Register
Disposal of the property of an entity deleted from the Business Register, and therefore also the rights of pledge established after its deletion from the Business Register, pursuant to Article 68, Paragraph 2 of the Business Registration Law (Official Gazette of the Republic of Serbia No. 55/04 and 61/05), cannot be enforced, registered or recorded with respect to the provision of Article 5 of the Decree on the Proceedings of Public Authorities, Organizations and Legal Entities Regarding the Inactive Business Entities Deleted from the Business Register (Official Gazette of the Republic of Serbia No. 49/06), not even under exceptional circumstances, according to Article 6 of the same Decree, unless the legal prerequisites for such action are fulfilled prior to the date of its deletion from the Register. The rights of pledge over the assets of the deleted entity, established prior to the date of its deletion, remain in force.
TYPES OF PLEDGE RIGHT
A. CONTRACTUAL RIGHT OF PLEDGE
Pledge agreement as legal grounds for contractual right of pledge
The debtor’s statement, signed by the business entity’s authorised person\ and validated by court, does not constitute valid legal grounds for registration of the right of pledge. Only the pledge agreement, with the content and form as stipulated in Article 2, Paragraph 1 and Article 3, Paragraph 1 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06), accompanied by the pledger’s explicit statement that he/she consents to registration of the right of pledge in the Pledge Register by the pledgee, pursuant to Article 5, Paragraph 2 of the said Law, constitute valid legal grounds for registering the contractual right of pledge.
Agreement on long-term cooperation (loan agreement and the like), which does not comprise elements of pledge agreement as stipulated in the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06), regardless of the validated photocopies of invoices or other proofs of payment, does not constitute valid legal grounds for registration of the right of pledge in the Pledge Register.
Lease Agreement as legal grounds
A Lease Agreement signed between the lessee and lessor, where the lessor is a third person, does not constitute legal grounds for the registration of the right of pledge, even though it contains all the elements of a pledge agreement as prescribed by the Law on Pledge of Movable Assets Registered in the Pledge Registry (“Official Gazette RS” no. 57/03…64/06), unless it is signed by the pledger. An authenticated statement by the pledger consenting to the registration of the right of pledge over the movable assets which are the object of the lease agreement is not sufficient.
Unincorporated partnership
A pledger identified in the lease agreement as an unincorporated partnership which, according to Art. 48 of the Company Law („Official Gazette of RS“ no. 125/04) and Art. 4. – 7. of the Law on Private Entrepreneurs („Official Gazette of SRS“ no. 54/89 and 9/90 and „Official Gazette of RS“ no. 46/91…35/02), does not have the status of a legal person, (a collective entrepreneur who cannot be the holder of rights and liabilities), may also not be registered as a pledger in the sense of Article 17 of the Law on Pledge of Movable Assets Registered in the Pledge Registry (“Official Gazette of RS”, no. 57/03…64/06).
Vessels as the object of pledge
According to Art. 14 para. 1 of the Law on Pledge of Registered Movable Assets („Official Gazette of RS“ no. 57/03…64/06), the provisions of this Law shall not apply to the pledge of vessels, for which registers have been instituted in accordance with special regulations.
As long as the Law on Internal Navigation (“Official Gazette of SRS” no. 54/90, “Official Gazette of RS” no. 85/05 and 101/05), defines the meaning of vessel, and provisions in Art. 209 – 222 of the Law on Maritime and Internal Navigation („Official Gazette of FRY“ no. 12/98…73/00), govern the issue of registration of vessels in special registers and the registration of contractual right of pledge over vessels registered in a special register, while Art. 906 – 928 of the same Law shall regulate the enforcement and security procedure for registered vessels, and consequently vessels shall not be subject to registration in the Pledge Register.
The fact that a vessel does not take part in navigation and is not registered in the Vessel Register, is of no consequence for the registration into the Pledge Register, as the provisions of this Law do not apply to pledge of vessels, for which special registers have been instituted.
B. STATUTORY RIGHT OF PLEDGE
Movable assets are not in the pledger’s ownership
In the procedure of registering the statutory right of pledge, ownership of movable assets over which the right of pledge is established may not be contested. This fact may be the subject of a complaint regarding the Tax Administration’s records in the procedure of movable assets inventory and appraisal, within three days following the receipt of the records, pursuant to Article 100, Paragraph 5 of the Law on Tax Procedure and Tax Administration (Official Gazette of the Republic of Serbia No. 80/02…. 62/06).
Estimated value of listed assets is lower than the actual value
Appraisal of assets on the inventory is conducted in the tax procedure pursuant to the Law on Tax Procedure and Tax Administration (Official Gazette of the Republic of Serbia No. 80/02…. 62/06), where Article 100, Paragraph 5 stipulates that the debtor may file a complaint regarding the inventory and appraisal procedure within three days from receipt of the record. Filing a complaint regarding the value of assets on the inventory in the procedure of registration of right of pledge does not affect the registration of the pledge if registration is performed on the grounds of executive decision by the competent tax administration.
Fixed assets as object of pledge
Pledged assets – fixed assets remain in the pledger’s (tax payer’s) possession; therefore, establishment of pledge of capital assets in a tax procedure in order to secure a tax debt, does not constitute an obstacle for conducting regular commercial activity.
Complaint regarding the tax decision and registration of the right of pledge
A complaint lodged by the taxpayer regarding the decision issued by the Tax Administration Office is the object of a separate tax procedure and does not affect its execution pursuant to Article 147, Paragraph 1, and in connection with Article 77, Paragraph 1 of the Law on Tax Procedure and Tax Administration (Official Gazette of the Republic of Serbia No. 80/02…. 62/06). The complaint does not defer execution of the tax administration act; therefore an executive decision by the competent Tax Administration branch office constitutes grounds for registration of statutory right of pledge (beside the records of inventory and appraisal of movable assets).
The pledger is a natural person or a legal entity
In the tax procedure, the tax administration body is obliged to supplement the application for registration of the right of pledge by precisely indicating whether the taxpayer – pledger is a natural person or a legal entity – limited liability company, i.e. on whose movable assets the right of pledge is established. On whose movable assets the right of pledge will be established depends on the nature of the taxpayer, i.e. the nature of his/her liability (a natural person is liable to settle debts from personal and household members’ assets, whereas a member of a limited liability company is not liable to settle the company’s debts from own assets, except up to the amount of his/her investment in the company as yet not included in the company’s assets).
Pledger – third party providing security for another’s debt (guarantor)
A third party may pledge his/her movable assets to secure another’s debt, as a guarantor, pursuant to Article 17, Paragraph 2 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/2003…61/05).
In the tax procedure, in forced collection of tax arrears, the Tax Administration may make an inventory of the movable assets of family members who are liable to settle the tax payer’s debts when this is a natural person, pursuant to Articles 85 and 102 of the Law on Tax Procedure and Tax Administration (Official Gazette of the Republic of Serbia No. 80/02…. 62/06). For tax on revenue realised from agriculture and forestry activities and revenue realised from self-employment, family members are vicarious guarantors, pursuant to Article 158 of the Law on Personal Income Tax (Official Gazette of the Republic of Serbia No. 24/01…10/07). In the procedure of deferral of tax debt settlement, the third party may voluntarily accept the tax debtor’s obligation to secure the tax debt settlement by concluding a contract of guarantee with the Tax Administration or, alternatively, the Tax Administration may, by agreement with the guarantor, make an inventory and conduct appraisal of the pledger’s, i.e. guarantor’s movable assets and draft a record of this, thereby securing the tax debtor’s liabilities.
In the enforcement procedure, the parties may agree before the court that a third party will secure the debt of another party and guarantee its settlement on behalf of the debtor by pledging his/her movable assets to the pledgee,. In this case, the parties proposing and entering into such agreement are all three parties: the pledgee, the debtor and the pledger.
In case of a contractual pledge, the third party providing security for another’s debt, as a guarantor, may agree to secure another’s debt by the same pledge agreement, or by a separate agreement, concluded with the pledgee.
Debt remission in the privatization procedure and right of pledge
In the privatization procedure, the pledgee, as a creditor of the state, is obliged to remit the entire debt of the object of privatization undergoing restructuring (pledger) and satisfy his claim from the funds realised through sale of the privatization capital or assets. However, such debt remission does not terminate the legal grounds for pledge registration. It only affects the procedure of forced execution, which is suspended for a certain period (the procedure is suspended until the expiry of the deadline stipulated by law). Upon expiry of that deadline, the creditor of the state satisfies his claim from the funds realised through sale of the privatization subject’s capital or assets. In addition to the right of pledge, a note can also be entered in the Pledge Register that the pledger is undergoing restructuring as part of privatization, and that the pledgee has declared his claims in relation to the privatization subject to the Privatization Agency, in order to avoid forced collection.
Conversion of debt into state-owned equity
Debt conversion may include the outstanding liabilities of the Public Revenue Administration, Republic Pension and Disability Insurance Fund and Health Insurance Fund. If the Government of the Republic of Serbia adopts the debt conversion programme, which is registered in the Business Register, the liabilities of legal entities subject to conversion cease to exist, the Development Fund of the Republic of Serbia assumes the liabilities towards the organizations whose revenues have been converted, and the pledgees are to recover their funds in proportion to the breakdown of the converted liabilities, from the revenue to be realized though sale of legal entities’ capital. The fact that a request has been filed for conversion of debt into state-owned equity, and that such a request is likely to be granted, does not affect the registration of right of pledge in the Pledge Register. This fact can only affect the procedure of execution.
Abortion of the forced collection procedure does not affect the right of pledge
Deferral of tax debt settlement approved by official order after instituting the forced collection procedure does not affect the right of pledge pursuant to Article 79, Paragraph 4 of the Law on Tax Procedure and Tax Administration (Official Gazette of the Republic of Serbia No. 80/02…. 62/06), considering that the liability still exists unless the pledger settles the debt within the approved period of deferral.
An entrepreneur is liable to settle all debts incurred in the course of conducting commercial activities out of his/her total assets
Pursuant to Article 49 of the Law on Business Companies (Official Gazette of the Republic of Serbia” No. 125/04), an entrepreneur is liable to settle all debts incurred in the course of conducting commercial activities out of his/her total assets, and Article 7 of the Law on Private Entrepreneurs (Official Gazette of the Socialist Republic of Serbia” No. 54/89 and 9/90 and Official Gazette of the Republic of Serbia No. 19/91…101/05) stipulates that the founder of a shop is liable to settle all debts incurred by commercial operation of the business out of his/her total assets. Therefore, the entrepreneur has the status of a natural person, as opposed to a legal entity, and is liable to settle debts not only out of the business assets, but also out of his/her total assets.
General authorization to dispose of the object of pledge is not a proof of transaction
General authorization, which authorises a different person to dispose of the object of pledge (most often a vehicle) and proof of receiving financial compensation do not constitute proof of transfer of ownership of the object of pledge.
Bankruptcy and right of pledge
The fact that right of pledge is established by inventory and appraisal of movable assets prior to commencement of the final 60 days before the date of instituting bankruptcy proceedings (separate creditors), affects the procedure of forced execution and collection, but not the registration of pledge in the Pledge Register, pursuant to Article 73, Paragraph 3 of the Law on Bankruptcy Proceedings (Official Gazette of the Republic of Serbia No. 84/04 and 85/05), considering that registration of rights to separate claim settlement in public records and registries may be approved and executed even after the bankruptcy proceedings have been instituted, if the conditions for registration were fulfilled prior to the date of initiating bankruptcy proceedings.
When the right of pledge is established by inventory and appraisal of movable assets during the final 60 days prior to the date of initiating bankruptcy proceedings (pledgees are not separate creditors), this fact yet again influences only the procedure of forced execution and collection, and not the registration of pledge in the Pledge Register. These pledgees may exercise their right only in the bankruptcy proceedings, pursuant to Article 66, Paragraph 2 of the Law on Bankruptcy Proceedings.
Conditions for pledge registration are not fulfilled when assets are seized in the field inspection procedure
When goods are seized during tax inspection due to suspicion that commodities or raw material, or processing material, may have been used or obtained with tax evasion or in some other way contrary to regulations, and the tax payer is not able to present proof of having obtained them in compliance with the regulations and with tax paid, if they are subject to taxation, then the conditions for pledge registration are not fulfilled pursuant to the provisions of Articles 65c and 65e of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/2003…61/05). The seized goods, pursuant to Article 134, Paragraph 4 of the Law on Tax Procedure and Tax Administration (Official Gazette of the Republic of Serbia No. 80/02….62/06), must be destroyed in a procedure supervised by a commission when the court order has become irrevocable.
The pledger is the user of the object of pledge under a leasing agreement
If the registration of pledge right is effected based on an enforcement order and minutes of the inventory and appraisal of movable assets by the competent branch office of the Tax Administration, in the procedure of registration of pledge right, the pledger cannot specify that he/she is not the owner of the object of pledge, but the lessee. Indicating the fact that the holder is a lessor and not an owner of the object of pledge is possible in the tax proceedings (objection, appeal) conducted before the Tax Administration in accordance with Art. 100 para. 5 and 142 of the Law on Tax Procedure and Tax Administration („Official Gazette of RS“ no. 80/02….62/06).
Motion for postponement of enforced collection
The motion for the postponement of enforced collection and the stipulation of an agreement of payment of tax debt by installments do not defer the registration of pledge right in pursuance of an enforcement order and minutes of the inventory and appraisal of movable assets by the competent branch office of the Tax Administration. A decision on the motion is taken in a special tax proceeding, and the termination of the enforced collection proceeding is of no consequence for the pledge right in the sense of Art. 79, para. 4 of the Law on Tax Procedure and Tax Administration (“Official Gazette of RS”, no. 80/02….62/06).
Tax debt, penalties and interest rates
The amount of the claim, which is secured by a pledge right, may include, in addition to the tax debt, also the penalties and interests arising from the termination of a business, when these are specified in the enforcement order of the competent branch office of the Tax Administration. The total amount of the debt determined in a special tax procedure cannot be disputed in a procedure for the registration of a pledge right. Legal means foreseen by the Law on Tax Procedure and Tax Administration (“Official Gazette of RS”, no. 80/02….62/06) may be used in a procedure conducted before the Tax Administration but not in a procedure for the registration of pledge right.
Partial debt settlement and statute of limitations
The partial settlement of a tax debt and filing an objection on the grounds of expiry of the claim is possible only in the tax procedure conducted before the Tax Administration in pursuance of Art. 100, para. 5 – objection, and Art. 142 of the Law on Tax Procedure and Tax Administration (“Official Gazette of RS”, no. 80/02….62/06) – appeal. In the procedure for the registration of a pledge right, only the circumstances that concern the pledge right and its registration into the Pledge Register may be indicated.
Settlement of the liability after registration into the Pledge Register
Payment of the tax debt after filing the request for registration of a pledge right, i.e. after maturity date of the claim secured by the pledge right, can be relevant only for the enforced collection procedure, and cannot have any impact on the establishment of the pledge right, in other words on the registration into the Pledge Register.
C. JUDICIAL RIGHT OF PLEDGE
Non-binding execution order
A non-binding execution order constitutes valid legal grounds for registration of pledge in the Pledge Register, considering that execution order is, as a rule, executed before it has become legally binding according to Article 54 of the Law on Enforcement Procedure (Official Gazette of the Republic of Serbia No. 125/04).
Photocopy of a court ruling does not constitute valid evidence
An uncertified photocopy of a court ruling, without clause of becoming legally binding, i.e. without proof that the litigation has resulted in a legally binding court ruling, shall not be considered valid evidence in the pledge registration procedure.
Partner’s consent to establish pledge on the share in a partnership
The fact that right of pledge over the partner’s share in a partnership has been registered in the Register of pledge right of movable assets and rights under the execution order, does not at the same time constitute disposal of the respective partner’s share in the partnership; the issue of disposal of the share in partnership is not raised until the procedure of execution, i.e. debt settlement from the value of registered right of pledge, in accordance with the law.
Court proceedings pertaining to pledge registration
Court order with the power of judicial settlement and enforcement clause constitutes grounds for the registration of judicial right of pledge, and court proceedings pertaining to this right of pledge, which are currently in progress or not finalised by an enforceable and legally binding court ruling, do not affect the same right of pledge and only a note on this fact may be registered.
Movable assets obtained by a lease as object of pledge
In the enforcement procedure, the pledgee enforcing settlement and the debtor may agree to secure the claim by establishing right of pledge over the debtor’s movable assets. If the debtor in the enforcement procedure has acted as owner of assets, waived his/her right to complaint and given unconditional consent to inventory and appraisal of movable assets, the fact that the respective movable assets have been obtained through a lease does not constitute grounds for the pledger to contest registration of such right of pledge in Pledge Register.
The pledger is not the owner of the movable assets
In the procedure of registration of a judicial pledge right based on the enforcement order and minutes on inventory and appraisal of movable assets, the ownership over pledged movable assets cannot be contested. This issue may be the object of a lawsuit instituted before a competent court.
Movable assets attached to real property
Capital assets of the pledger which are attached to a real property, i.e. movable assets of greater value which are treated like real property based on court expert findings or court decision, the moving of which would require considerable means and efforts, cannot be registered in the Pledge Register in the sense of Art. 1, in connection with Art. 9 – 14 of the Law on Pledge of Movable Assets Registered in the Pledge Registry (“Official Gazette of RS” no. 57/03…64/06). The Register of the Right of Pledge on Movable Assets and Rights is not competent to register pledging of real property.
Real property by use value
An Agreement to secure a financial claim stipulated before the court in an enforcement procedure, with the express will of the parties to define the equipment which is an integral part of the production unit as a “fixture to real estate”, in the sense of Art. 5, para. 1, item 2 of the Law on Mortgage (“Official Gazette of RS” no. 115/05), which the court has accepted, ordering the registration into the competent real estate register, cannot constitute legal grounds for the registration of a right of pledge into the Pledge Register.
By will of the parties at the moment of stipulation of the agreement, movable assets are declared as real property by their use value, and consequently they may only be registered in the real estate registry.
Bankruptcy of a holding company, separation of a dependent company and enforcement order
In accordance with Art. 400 para. 4 of the Company Law („Official Gazette of FRY“ no. 29/96…36/02), enforced on the basis of Art. 456 of the Company Law (“Official Gazette of SR“ no. 125/04), until the expiry of the term for the completion of privatization foreseen by the law governing privatization, a dependent company which has separated from a holding company, has unlimited joint and several liability with the holding, for liabilities contracted until the day of separation. Consequently, the fact that there is an ongoing bankruptcy proceeding against the holding, and that the company has separated from the holding is of no consequence for the registration of pledge right established in the enforcement procedure based on the minutes on the inventory and appraisal of the enforcement order approved by the competent court.
REGISTRATION OF AMENDMENTS TO RIGHT OF PLEDGE
Addendum to pledge agreement
An addendum to pledge agreement constitutes legal grounds for registration of amendments to data on a right of pledge already registered in the Pledge Register. Such registration has the character of a new entry, pursuant to Article 63 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06). Registration of amendments to right of pledge must also include a record of the time (day, hour and minute) of receipt of application for registration in the Business Registers Agency.
Annex to the Pledge Agreement and increase of capital
Registration of changes and amendments of data on the object of pledge cannot be effected on the basis of an Annex to the Pledge Agreement, in which the initial capital of the pledger is specified as paid financial and non-financial capital. The pledge registered on 100 per cent of the share in the limited liability capital includes both the financial and non-financial capital, considering that under Art. 13 of the Company Law (“Official Gazette of RS“ no. 125/04) the partners, members and shareholders of the company are liable to pay the agreed contributions to the capital as required by this Law, the articles of association, the agreement or other company enactment, based on which they shall acquire a share in the company, while Art. 115 of the same Law prescribes that a member of a limited liability company shall acquire a share in the initial capital of the company in proportion to the percentage of his contribution.
REGISTRATION OF A NOTE
Registration of the note on the initiation of settlement procedure
Application submitted by a single pledgee is sufficient to commence the procedure of registration of the note on the initiation of settlement procedure
In the situation where several parties are stated as pledgees in the order on right of pledge registration (joint and several pledgees), any action taken by one of the pledgees, without opposition by others, including application for registration of settlement procedure initiation, has the same legal effect as if the same action were also taken by all other pledgees.
Restructuring and privatization process
The fact that a business entity – the pledger is in the restructuring and privatization process, either through tender or public auction method, does not affect establishment of the right of pledge. This fact may be registered as a note in the Pledge Register and may have implications only for the forced execution procedure.
Registration of the note on dispute
A note on dispute can be registered only when right of pledge has been registered in Pledge Registration. Only after the right of pledge has been registered in the Pledge Register is the pledgee obliged to request registration of debt settlement procedure initiation in the Pledge Register, pursuant to Article 37 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia No. 57/03…64/06).
Complaint against the order issued by Tax Administration does not constitute grounds for registration of the note on dispute
A complaint filed against the order issued by Tax Administration does not constitute grounds for registration of the note on dispute. The existence of a dispute, i.e. litigation in connection with the object of pledge, the right of pledge itself or some other relations between the parties regarding the pledge, may constitute grounds for registration of the note on dispute in the Pledge Register, pursuant to Article 64, Paragraph 2 of the Law on Pledge Right of Movable Assets Registered in the Pledge Register (Official Gazette of the Republic of Serbia” No. 57/03…64/06).
Amount of due debt and notice
For the registration of the notice of beginning of the procedure for levying execution, establishing the amount of due debt, interest and other costs is irrelevant, provided that there is compliance with Art. 35 and 36 of the Law on Pledge of Registered Movable Assets (“Official Gazette of RS“ no. 57/03…64/06). If the debtor fails to pay the due debt, the pledgee shall notify the debtor and pledger that he intends to exercise his right of pledge and by presenting evidence of the debtor’s and pledger’s notification, if these are two different persons, he may register the beginning of the levying of execution, regardless of the amount of unpaid debt.
Abolishment of the enforcement order and registration of the beginning of the procedure for levying execution
When a higher instance court has abolished the first instance enforcement order and returned the proceedings to the court of first instance and the first instance court has not issued a new enforcement order yet, legal grounds have ceased for the registration of the beginning of levying of execution.
Fax and registration of the beginning of the procedure for levying execution
The registration of the beginning of the procedure for levying execution cannot be made based on a notification sent to the pledger by fax. Compliance with provisions set forth in Art. 26 of the Law on Pledge of Registered Movable Assets (“Official Gazette of RS”, no. 57/03…64/06), for the registration of the beginning of levying of execution, is judged based on a notification sent by registered mail to the pledger and debtor, if these are different persons.
Institution of bankruptcy proceedings
The fact that bankruptcy proceedings have been instituted against the pledger before the adoption of the decision on the registration of the beginning of the procedure for levying execution on pledged assets is of no relevance, considering that all requirements for the beginning of the procedure for levying execution have been met, as per Art. 36 and 37 of the Law on Pledge of Movable Assets Registered in the Pledge Register (“Official Gazette of RS”, no. 57/03…64/06). This is relevant for the procedure for levying execution itself, when, in accordance with Art. 8 of the aforesaid Law, the provisions of the Law on Bankruptcy (“Official Gazette of RS” no. 84/04) shall apply.
DELETION OF RIGHT OF PLEDGE
Sale of assets in bankruptcy proceedings
The purchaser obtains the asset sold in bankruptcy proceedings without encumbrance, pursuant to Article 111, Paragraph 11 of the Law on Bankruptcy Proceedings (Official Gazette of the Republic of Serbia No. 84/04 and 85/05); however, in order for the right of pledge to be deleted from the Pledge Register, the bankruptcy administrator or the purchaser – new owner must request deletion of the right of pledge from the Register.