Highlights

The House of Representatives unanimously adopts the draft law on personal property security : 01/04/2019

The House of Representatives unanimously adopts the draft law on personal property security

The House of Representatives unanimously adopted the draft law 18.21 relating to the personal property security, Monday, April 1st 2019, in a plenary session held during the special session convened by the Government.

The draft law, that Mr. Mohamed Benchaaboun, Minister of Economy and Finance, presented contains provisions amending, complementing or canceling two basic laws, here the Dahir forming Code of Obligations and Contracts and Law 15.95 forming Code of business.

On this occasion, Mr. Benchaaboun stressed that this text has been much anticipated by the economic actors, with regard to its favourable impact in terms of access to financing or facilitation and promotion of business climate for investors.

The draft law will also improve Morocco's image in the international reports regarding business climate.

At the same time, the Minister reviewed the main components of this legislation,mainly a broader application of personal property security, the facilitation of their creation and the establishment of the national electronic register of the personal property security.

The bill has set the objectives of simplifying companies' access to financing sources, by giving a pledge of personal property security they are provided with, improving the competitiveness of companies, by securing investment funding transactions , reinforcing the rules of transparency in transactions related to the personal property security.

To achieve these objectives, the draft law established a number of principles together with objective and practical rules to facilitate transactions and achieve legal security.

These rules shall address the widening of the application of personal property security, as the current legal framework is characterized by the dominance of the hypothec with delivery as a general rule for pledges. In addition, the draft law ensured, on the one hand, to expand the movable hypothec without delivery with a view to covering every form of movable assets beyond the commercial or professional sector and introducing new forms of pledges, on the other.

​Among the principles initiated by the bill are the establishment of a national register of the personal property security in accordance with the enshrining of the principle of transparency in transactions relating to personal property security. Thus, the bill provides the establishment of the national electronic register of the personal property security to centralize data on the pledged properties. This register facilitates the information of creditors on the financial situation of the enterprise. In addition, the bill seeks to enhance the freedom of the contracting parties through a range of rules. It also establishes the proportionality principle between the debt and the amount allocated as security, in order to ensure balance between the two sides of the mortgage deed.