Security over movable assets in the UAE

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Published August 2017

The UAE Federal Government, with an aim towards providing an effective and well organised process for taking security over movable assets, introduced UAE Federal Law No. 20 of 2016 on Mortgage of Movable Assets (“Mortgage Law”). The provisions of the Mortgage Law became effective from 15th March, 2017 and provides that executive regulations will be issued within a period of six months from 15th March, 2017. The executive regulations are expected to provide further details in relation to the scope, application and enforcement of the Mortgage Law (including the implementation of a security register).

Prior Legal System and the Mortgage Law

Prior to the introduction of the Mortgage Law, the creation of security over movable assets was predominately governed under the provisions of the UAE Federal Law No. 5 of 1985 (the “UAE Civil Code”) and UAE Federal Law No. 18 of 1993 (the “Commercial Code”). The UAE Civil Code and the Commercial Code required for possession of the movable assets to be physically delivered by the borrower to the secured creditor. The Mortgage Law, on the other hand, introduces major changes to the way in which security is created over moveable assets as it attempts to introduce security interest concepts which are similar to the widely known common law concept of a ‘floating charge’.

The purpose of this note is to highlight some of the salient changes being brought to the creation and registration of security over movable assets pursuant to the Mortgage Law.

What constitutes secured assets?

The Mortgage Law provides a broad list of assets which can and which cannot be secured. Some assets which are expressly set out as capable of being secured under the Mortgage Law include:

  • receivables;
  • accounts and deposits with banks and other licensed financial institutions;
  • stock ready for sale;
  • raw materials, work in-progress and equipment and tools;
  • crops, livestock and their by-products; and
  • property which is affixed to immovable assets, but can be removed without causing damage.

The assets which are specifically stated as not capable of being secured include:

  • personal and household items (other than if the mortgage is for the purchase of such items);
  • insurance policies;
  • salaries; and
  • future rights arising from inheritance or wills.

Security Register and Prior Security Interests

The Mortgage Law provides for the establishment of a security register and any security interest created pursuant to the Mortgage Law will need to be registered in this security register for the purposes of priority and effectiveness against third parties.

Any security interest over movable assets created prior to the date of the Mortgage Law may be registered in the security register provided that such registration is carried out within one year of such date and proof of the existence of the security is provided.  

Another welcome addition in the Mortgage Law is making certain basic information in the security register publicly available. An open and searchable security register allows third parties to ascertain whether any prior encumbrances exist on a particular asset and is designed to put third parties on notice. However, it appears under the Mortgage Law that parties to the security documents may have the ability to restrict access to information relating to a security interest in the security register if they so please.

The matters above will be clarified further with the introduction of the executive regulations.

Registration under the Mortgage Law and priority of security interests

A creditor’s security interest over movable assets can be registered by adopting the procedures that are provided in the Mortgage Law and the executive regulations (which will be issued pursuant to the Mortgage Law). The basic requirements to register a security interest are as follows:

  • a written mortgage contract must be executed between the creditor and the debtor. The mortgage contract must include: (a) the details of the assets to be mortgaged; (b) declaration from the debtor that he has the right to create the mortgage and dispose the assets; (c) disclosure of any third-party rights to the assets; and (d) notification to the holder of the assets (if the assets are not in the possession of the debtor). The parties to the mortgage contract also have the right to exclude and/or limit certain provisions of the Mortgage Law;
  • the registration form (the information to be included in the registration form will be specified in the executive regulations) to be filled and submitted to the Registrar; and
  • notification of the registration to third-party holders of the mortgaged assets (if any).

It should be noted that there is no requirement for the creditor to obtain possession of the mortgaged assets and a creditor’s rights to the mortgaged assets will be effective against third-parties upon the mortgage being registered.

The Mortgage Law provides that registration of a security interest will provide the creditor priority over other creditors. Priority in relation to a security interest will be determined by the date and time of registration. Priority of security interests existing prior to the Mortgage Law will also be determined in accordance with the date of creation of such security interest.

Additionally, the Mortgage Law also contains provisions in relation to objecting to the creation of a mortgage, subrogation of the mortgage, cancellation of the mortgage, tracking and inspection rights of the creditors over the mortgaged assets, and disclosure of information to the general public. It is understood that further details in relation to the practical application of the Mortgage Law and the procedures and fees will be covered in the executive regulations.


Unlike the existing enforcement regime, the Mortgage Law introduces self-help remedies which will be available to creditors and should, in principle, make enforcement an efficient exercise both in terms of time and cost. The use of self-help remedies largely revolves around the nature of the movable asset over which the security interest is subsisting. Considering the existing enforcement regime, the enforcement of security interests will be a key area to monitor when the Mortgage Law (and the executive regulations) are fully effective. Apart from the introduction of the new self-help remedies, the Mortgage Law retains the ability to enforce security through conventional means (that is with the assistance of the courts).


The Mortgage Law has been well received by both borrowers and lenders who are looking to undertake secured lending transactions as the security interest concepts introduced by it will not only permit a borrower to utilise its movable assets for business purposes but will also allow a creditor to be protected. However clarity, in the form of the executive regulations, will be crucial so that borrowers and lenders can fully utilise the benefits of the Mortgage Law.

All in all, the Mortgage Law is a welcome and important development of a regime which will provide great efficiencies for borrowers, lenders and future third parties who are looking to create security interests.



Adil Shafi, Partner,

Devvrat Periwal, Associate,



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