Turkey: New Era In Collateralization Of Movable Assets Under Turkish Law

Last Updated: 31 July 2017
Article by Serkan İçtem and Zeynep Yagmur

The Law on Pledge over Movable Assets in Commercial Transactions numbered 6750 was published in the official gazette on 28 October 2016 and has entered into force on 1 January 2017 (the "Movable Pledge Law"). With its enactment, the former Commercial Enterprise Pledge Law dated 21 June 1971 and numbered 1447 (the "CEP Law") has been repealed.

The Movable Pledge Law introduces a number of innovations as for pledges to be perfected upon various types of moveable assets, rights of claim, and also includes a possibility to form a pledge over the commercial enterprise as a whole. This is surely the most interesting aspect of the Movable Pledge Law which signifies a leaning towards the concept of a "blanket lien" which in classic sense an unavailable option under Turkish law due to the default statutory principle of the need to strict delineate the secured assed.  

As mentioned above one of the fundamental amendments introduced with this new legislation is the ability to lay a pledge upon (almost) the entire commercial enterprise not only for the existing commercial assets but also for assets to be acquired as well and without any necessity to execute an additional protocol to include those future assets into the pledge scope. This certainly adds favorably onto the practical side as there would not be any formality or paperwork to extend the pledge as and when the commercial enterprise expands in tandem.  


Unlike the former CEP Law, the Movable Pledge Law does not require all aspects of the commercial enterprise including commercial name, title, machinery, equipment, licenses and IP rights to be included in the security package. The former law envisaged the commercial enterprise as a whole and one indivisible unit thus only allowed the whole enterprise to be pledged.  The new legislation however leaves discretion to determine the scope of the pledge to the parties, allowing them to exclude certain commercial assets out of the scope, if agreed. Types of assets permitted be included within the scope are:

(i) receivables; (ii) perennial plants; (iii) intellectual property rights; (iv) livestock; (v) raw materials; (vi) any kind of earnings and revenues; (vii) licenses and permits which do not require registration with other registries and which do not qualify as administrative permits; (viii) rental income; (ix) tenancy rights; (x) any and all commercial equipment, including machinery, tools, vehicles and electronic communication apparatus; (xi) perishable goods; (xii) stocks; (xiii) agricultural products; (xiv) commercial titles and/or trade names; (xv) commercial or artisanal enterprises; (xvi) commercial license plates or commercial transportation lines; (xvii) commercial projects; (xviii) coaches; and (xix) any combination of the foregoing list of movable assets which are subject to joint ownership or which are used by third parties.This is a much longer permitted assets list as compared to the CEP Law. The parties of the agreement will decide content of the pledge and will register each selected asset separately by entering into the Pledged Movables Registry (the "Pledged Movables Registry) to be included to the scope.

In addition to the above, the new legislation allows establishment of pledge over future/unmatured assets or rights or their proceeds provided that they are clearly defined under the pledge agreement. This aspect will surely be very instrumental in many finance deals such as securitization of future cash flows of a certain asset pool. Certainly, these new aspects will also greatly aid the collateralization related issues in commodity financing deals as well where segregation (thus delivery of physical control over secured assets) requirement of the commodity in these deals posed a great amount of unpracticality and legal ambiguity in potential enforcement of the security laid thereupon.  


The Movable Pledge Law increases the scope of parties eligible to be a party to the pledge agreement and allows pledge agreement to be executed between;

(i) credit institutions and traders, craftsmen, farmers, producer organizations and self-employed individuals and legal entities and

(ii) traders or craftsmen

These amendments aim to enable a broader use of the system under the Movable Pledge Law.


According to the Movable Pledge Law, the security interest created is prioritized by a degree system. The parties may decide to adopt a fixed degree system or an acceleration system (where pledge automatically moves up to an empty slot) and more importantly have the ability to determine the priority in between various pledges by assessing different degrees thereto. Unlike the CEP Law, the new system is not a "first come first served" system.


In order to be able to place a pledge over an entire enterprise's assets, the new legislation imposes a restriction that is a "loan to value" ratio requirement, which requires an assessment to be made between the value of assets owned by that enterprise and the covered debt amount. The principle is that if the individual assets of that enterprise are sufficient to secure the debt, one cannot establish pledge over an entire commercial enterprise. According to the secondary legislation the permitted loan to value ratio is 1:1.2.  Clearly the law aims to strike a balance between the creditor and the debtor interests and attempts to block an over collateralization imposition by the secured creditor.


An important amendment is in relation to the formal requirement for execution of a pledge agreement. With this new legislation, the agreement must be drafted from within the Pledged Movables Registry system either by secure e-signature or actual hand signature. If the parties choose actual hand signature option than the agreement must be signed and approved before an officer of the Pledged Movables Registry or before any public notary after being printed online from the system.


Practice for perfection of the pledge also greatly changed in the new movable pledge system. Now, one of the parties to the agreement (either the pledgee or the pledgor) has to be pre-registered to the official Pledged Movables Registry system before executing the agreement. This is done by way of an application to be made to a notary.

After registration and logging into the online system, steps imposed by such electronical database has to be precisely followed to have a print-out copy of the draft agreement. Different sheets must be filled for each asset to be included into the scope of the pledge (for example; receivables or raw material sheets). Parties will need to answer whether such asset currently exists or is a future one. Thereafter, together with the print-out copy, parties have to go to a public notary to sign the agreement unless they have used electronic signature.

From the Pledged Movables Registry, the software automatically leads you to form an agreement which is drafted in very basic, often insufficient, terms. In principle, the Pledged Movables Registry software is designed to enable parties to incorporate special terms for the agreement and there is a special part where the system asks the user whether there are any special contractual terms and conditions to be entered. Currently, many notaries (wrongfully!) claim that the commercial enterprise pledge has to be in the exact content envisaged by the system and no additional terms may be incorporated in to the agreement draft which hopefully will be resolved soon after the registration practice settles.

The Pledged Movables Registry also enables the registrants to be able to investigate any existing movable pledge already placed on a company by entering the company's MERSİS (Central Registration System Number) number or real person's Turkish identity number.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions