Commercial pledge regulation and registration procedure in Estonia

Commercial pledge regulation in Estonia

Commercial pledges are regulated in Estonia primarily by the Commercial Pledges Act. Under the Commercial Pledges Act, a commercial pledge is an undertaking that is registered in the Commercial Pledge Register, whereby a pledge uses his or her movable property as a security for a claim without transferring the possession of the property to the pledge. Essentially all encumberable property can be included in a commercial pledge that is owned at the time of the pledge by the undertaking and that is acquired afterwards. However, certain items are exempt from commercial pledges such as money in credit institutions, shares and stocks. The extent of the claim secured by a commercial pledge is limited to the amount pledged, with provisions that consider unpaid interest within three years before the sale of the pledged property and other costs as a part of the security covered by the pledge.

Registration of commercial pledge in Estonia

A commercial pledge shall be created on the basis of a notarised agreement or a court judgement and registered with the Commercial Pledge Register. In the event of the pledgee sending an application to the Commercial Pledge Register, the notarised consent of the pledgor is required.

The legal effect of a commercial pledge begins when the relevant entry is signed in the Commercial Pledge Register. Consequently, the commercial pledge is extinguished by the removal of the relevant entry with the exception of a situation otherwise provided by law. Generally, commercial pledges are removed from the Commercial Pledge Register by an application from the pledgor that includes the notarised consent of the pledgee, alternatively the pledgee may file an application whereby the commercial pledge will be removed from the register.

In a situation where the commercial pledge has been lawfully ended prior to its deletion from the register, the commercial pledge will be removed by the registrar. 

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