Making Security Interests Public

Abstract

Movable assets tangible or intangible often account for most of firm's capital stock. Thus it is important for jurisdictions to develop adequate laws on secured transactions to allow borrowers and lenders to recognize movable assets as collateral, supporting financing secured with such assets. Though the legal and regulatory framework is essential to any secured transactions system, the efficacy of a secured transactions law also requires an effective registration mechanism for interests in movable property. This report focuses on analysis of such institutions, highlighting the importance of a publicly accessible registry where information on interests in movable assets can be registered. The main goals of collateral registries are to provide public notice of interests in movable assets and to establish priority in the assets described in the notice for secured creditors. This report also addresses the different registration mechanisms for security interests in movable property and their effectiveness in achieving the two goals stated above. It does so using the results of a 2010 World Bank Group survey on collateral registries. The report emphasizes the practices and features available in different registries and key characteristics of effective collateral registries. The experiences of jurisdictions that have instituted best practice registries show how technology can improve the efficiency of collateral registries.