China to Implement Unified Registration for Pledge of Movable Property and Rights Starting from January 1, 2021
On December 22, 2020, the State Council issued the Decision of the State Council on the Implementation of Unified Registration for Pledge of Movable Property and Rights (Guofa [2020] No.18) (hereinafter referred to as the Decision), which provides that unified registration for pledge of movable property and rights will be implemented nationwide starting from January 1, 2021. The Decision further refines and implements the Civil Code and the Regulation on Optimizing the Business Environment, marking the official launch of unified registration for pledge of movable property and rights in China.
According to the Decision, since January 1, 2021, the People’s Bank of China (PBC) shall take full responsibility for the unified registration for pledge of movable property and rights, and the Credit Reference Center of the PBC (CCRC) will carry out registration services. Where a market entity seeks to register for or inquire about pledge of movable property and rights, it shall apply for registration or make inquiries online through the CCRC unified registration and publicity system for movable property financing. The registering party shall be held accountable for the authenticity, completeness and legitimacy of the contents registered. The registration departments will not conduct substantive review of the registration contents or approval registration.
There are seven categories of pledge of movable property and rights subject to unified registration, including pledge of production equipment, raw materials, semi-finished products and products, pledge of accounts receivable, pledge of deposit slips, warehouse receipts and bills of lading, financial leases, factoring, retention of title and other pledge of movable property and rights qualified for registration. Among them, the registration responsibility for pledge of production equipment, raw materials, semi-finished products and products previously undertaken by the market regulation authorities will be assumed by the PBC. New registration, and the alteration and cancellation of existing registration shall be handled by the PBC since January 1, 2021. Those that have already completed registration shall not be required to register again. A two-year transition period was set up to ensure smooth market transition. The CCRC will take over inventory registration data from the State Administration for Market Regulation (SAMR). During the transition period, the SAMR will continue to assume the legal obligation of providing inquiry services. The unified registration and publicity system for movable property financing will provide supporting inquiry services for market entities. The PBC and the SAMR jointly released an announcement of a transition plan after the adjustment of registration responsibilities, and will work together to ensure data transfer and smooth transition.
With unified registration for pledge of movable property and rights in place, market entities may apply for registration for seven categories of pledge of movable property and rights within one system. Meanwhile, they could get a full picture of the real rights for pledge of all movable property in the name of the guarantor by making one query. In this way, it will increase the transparency of real rights for pledge, add to the certainty of realizing the rights of secured parties, reduce the risks and costs of credit transactions and bolster the readiness of financial institutions and other secured parties to provide pledge financing.
Currently, the PBC has guided the CCRC to make sound preparations for unified registration across the board. Implementing unified registration for pledge of movable property and rights nationwide will improve the efficiency of pledge financing of movable property and rights, facilitate financing for enterprises, encourage the financial sector to better serve the real economy and optimize China’s business environment.
