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Asset classes used as collateral for security

Real estate

Can security be granted over real estate? If so, what are the most common forms of security granted over real estate and what is the procedure?

Yes, such security will be regarded a hypothec, the only form of security available over real estate. A hypothec is created on the basis of a notarised agreement and registered with the state register of real estate run by the state service.

Machinery and equipment

Can security be granted over machinery and equipment? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security (in the form of a pledge) can be granted over machinery and equipment. A pledge must be made in writing. However, if it contains an out-of-court enforceability clause, it must be notarised to be valid and enforceable. A register for encumbrance of movables is expected to be created in 2018 and the registration of pledges would be one of the options to ensure a pledge’s priority.

Receivables

Can security be granted over receivables? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security granted over receivables is possible and regarded as pledge of rights (claims) to be established by a written agreement (and notarised for an out-of-court enforcement clause).

Financial instruments and cash

Can security be granted over financial instruments? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Security over financial instruments and cash is also possible. Security over financial instruments is formalised by a pledge agreement and must be registered with the National Depository Centre, which has three business days to process the registration application appending the pledge agreement. During that period, the operations with the pledged instruments will be suspended.

To create security over cash, proceeds must be credited with a bank or notary’s deposit account.

Can security be granted over cash deposits? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security over cash deposits is possible and the procedure to follow is the same for a pledge of rights (see above). Normally, an account bank is also made a party to the security agreement.

Intellectual property

Can security be granted over intellectual property? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, IP rights as intangible assets can be subject to security in Azerbaijan. Security over trademarks is subject to state registration. A notarised agreement must be made and filed, together with an application to the Azerbaijani State Committee on Standardisation, Metrology and Patents.

The committee has one month to review the application and register the security by making an entry into the register and notifying the applicant within five business days of the registration completion. The information about the registered security and any subsequent amendments to it is published in the committee’s official bulletin.

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