The Movable Pledge within the Scope of Law on Movable Pledge Registry-Tares 19 April 2019
Law on Movable Pledge in Commercial Transactions (“Movable Pledge Law”) entered into force in 01.01.2017 and brought a number of innovations including commercial enterprise pledge by abolishing Law on Commercial Enterprise Pledge (“Abolished Pledge Law”).
The most important of these is TARES system. The commercial enterprise pledge, which could only be established by the credit and financial institutions in the time of the Abolished Pledge Law, has become available between natural and legal persons. So, how can be movable pledge, which aims expand its application by this way, established within the scope of the Movable Pledge Law? How is the practice? What kind of problems is faced in the TARES system?
What is the TARES System?
TARES is “Registry of Movable Pledge for Commercial Enterprises”. Within the scope of the Movable Pledge Law now, it is possible to establish pledges on some or all of the assets of commercial enterprise instead of establishing pledge on entire enterprise in the commercial enterprise pledges. Moreover, by the way of TARES, where any assets of commercial enterprise are subject of pledge, information regarding with in question pledge can be inquired.
Can Movable Pledge/Commercial Enterprise Pledge Be Established Without Using TARES?
In the time of abolished Law, agreements of commercial enterprise pledges could be concluded before any notary. Process of pledge was concluded by writing distinctive qualifications of asset that are subject of pledge, in appendix of the agreement and by journalizing pledges on Company’s assets.
Notwithstanding that agreements concluded by this way will not have any legal validity under the new regulations; in question pledge will not be valid unless it is registered at Registry of Movable Pledge for Commercial Enterprises.
Also; while agreement of movable pledge/commercial pledge could be concluded before any notary at time of abolished Law, pledge which is established within scope of the Movable Pledge Law is carried out by notaries in the location of the headquarter of the commercial enterprise.
In the current situation, it is not possible to establish a commercial enterprise pledge / movable pledge in the presence of notaries without pre-registration through TARES system.
How to Use TARES?
It is mandatory to enroll the system to carry out the movable pledge transactions. For the membership, the nearest notary public should be applied, and password of the system should be obtained by giving ID number for entering the system.
How is Movable Pledge/ Commercial Enterprise Pledge Established?
In the current situation, it is possible to establish pledge in two ways via TARES system:
Agreement with Wet-ink Signature: After logging into TARES system, relevant information is identified, you can prepare the movable pledge agreement to be signed with a wet signature, and you can register the transaction by going to the nearest notary at the place where your business is located.
Agreement with Electronic Signature: One of innovations which are brought by the Movable Pledge Law, is to make it possible to sign the agreements of movable pledge / commercial enterprise pledge in electronic form. Agreement of movable pledge can be formed in electronic environment; you can register remotely without going to the notary.
What are the problems experienced with TARES in practice?
Although it has been in practice since early 2017, there are many problems with the system since it is a developing system and it is not yet widespread use by notaries.
Especially, due to the fact that notaries other than big cities do not carry out transactions of movable pledge/ commercial enterprise pledge; many of them can not inform the parties about the registration in TARES System, and this situation causes invalidity of concluded agreements.
Furthermore, it is not possible to correct mistakes regarding with pre-registration by same records; therefore a new record should be created through System in each mistake made.
Moreover, the Movable Pledge Law regulates that a degree can be determined regarding the pledge, since no input can be made on the system there is no clarity in this regard.
In conclusion, previously, while pledge could be swiftly established by adding pages of movable list to appendix of the agreement; in current situation distinctive features, barcodes and serial numbers of all assets which is subject of pledge (including small assets such as bolts, screws, flakes, chairs, tables) are required to separately register on the system. Unless these records are made and excel lists prepared according to the format determined by the system, it is not possible to establish pledges on these assets. Since it is not very easy to determine the distinguishing features of each of these materials in this detail, and even in some enterprises it is impossible to keep this inventory lists duly; this situation creates many difficulties in practices.
However, in spite of all these problems, the fact that the securities / commercial enterprise pledge is kept in a systematic and transparent environment in this way and that the pledges established on companies and / or their assets on the system are clearly visible by simple inquiries provide reliability in the commercial life.
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