UAE’s Ministry of Finance (MoF) has signed a cooperation agreement with Emirates Development Bank (EDB) to create an electronic register to publicise related rights to ‘Mortgage of Movable Property’ under the management of EDB.

The agreement aims to provide a legal and legislative environment for companies and projects to pledge their movable properties as security for loans from banks and financial institutions. The register grants the public access to the database.

The agreement was signed by Khalid Ali Al Bustani, assistant undersecretary of International Financial Relations Sector at MoF, and Rashid Mahboob Misbah, acting CEO of Emirates Development Bank.

Al Bustani noted that establishing an electronic register to publicise related rights to ‘Mortgage of Movable Property’ in order to allow companies and projects to register their movable property as security for loans, provides security rights over immovable property, specifically that most of the lending activities in the country are real estate loans.

“The ‘Mortgage of Movable Property’ provides financing to the legal and legislative environment that allows companies, including SMEs (small and medium enterprises), to pledge their movable properties as security for loans from banks and financial institutes. The product’s introduction comes parallel to establishing a legal and regulatory framework. It is also feasible for the concerned parties and the public to view information that is published in the register, based on the Federal Law No. (20) of 2016 and its executive regulations,” Al Bustani said.

“This project strengthens the ability of financial institutions to expand their lending operations against movable securities and the use of movable funds that include, for example, inventory and receivables as collateral. Economic analysis shows small and medium-sized enterprises are more likely to access finances in countries that adopt the secured transaction law.

This, in turn, supports the achievement of a better credit rating, helps to increase their competitiveness in the sector whilst also improving the stability of the financial system; in virtue of the legislative framework organised for secured lending operations,” he added.

MoF has assigned EDB the task to create an electronic register to publicise related rights to ‘Mortgage of Movable Property’. EDB’s role will comprise implementing, developing and supporting developmental projects in the country inclusive of industrial, real estate, crafting and agricultural projects, in addition to facilitate real estate credit allocated to the construction, maintenance and development of buildings intended for personal housings, and accepting deposits, opening bank accounts and other banking and financial activities.

The agreement signed between the Ministry of Finance and the Emirates Development Bank stipulates committing to a number of measures including establishing and managing the electronic registry in accordance with international best practices, as well as holding regular meetings and workshops in collaboration with the Ministry of Justice, as well as specialists and experts to introduce law implementation procedures. – TradeArabia News Service