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The Rights of Third Parties in Respect of Securities

Aleksandar Sajic's picture
Published: 18/04/18 - Country: Bosnia and Herzegovina

The registration and deletion of the rights of third parties in respect of securities are regulated by the Regulations on Registration and Transfer of Securities (hereinafter: Regulations) passed by the Central Registry of Securities of the Republic of Srpska a.d. Banja Luka (hereinafter: the Central Registry), which entered into force in March 2017. The rights of third parties that can be established on the securities are the right of usufruct or pledge.

Registration of a pledge

A pledge on securities shall be registered on a pledge account opened as a subaccount within the account of the owner of securities of a custody account i.e. collective custody account. A new pledge cannot be registered on securities with already registered pledge.

The legal basis for registration of a pledge on securities may be a law, a court decision, or a securities pledge agreement. The registration of a pledge in the Central Registry system shall be completed within three business days from the day of receipt of an application for the same. A pledge shall be considered as established at the moment of its registration in the Central Registry.

Any changes that might occur in respect of the registered pledge shall be entered in the Court Registry in the same way as its initial registration. Data that can be changed are the following: details about the creditor, data on the number of claims secured with the pledge, the due date of the claim and the reduction of the amount of securities which are the subject of the pledge.

Sale of pledged securities

If a pledge is registered on the basis of a law or a court's decision or decision of any other competent authority, the Central Registry shall carry out the procedure of selling the pledged securities upon receipt of the order issued by the court or other competent body. If a pledge is registered on the basis of the agreement, the Central Registry shall carry out the procedure of selling the pledged securities upon the request of the pledgee.

Upon receipt of the order for sale, the Central Registry shall forward the order to the authorized stock exchange broker on the same day. After selling the pledged securities, the authorized stockbroker shall make the payment of the proceeds of the sale, minus the amount of the brokerage commission, to the special purpose account designated by the Central Registry. From the proceeds of the sale, the remuneration shall be paid first to the Central Registry for the execution of the order for sale, and then to the claim of the pledged creditor on the basis of interest and finally to the claim of the pledged creditor based on the principal debt. If there are any remaining funds the same shall be paid out to the pledge debtor.

Deleting a pledge over securities

If a pledge is registered on the basis of the law or the court's order or order of any other competent authority, the Central Registry shall carry out the procedure of deleting the pledge upon the request of the court or other competent authority. If the pledged right is entered on the basis of an agreement, the Central Registry shall carry out the procedure of deleting the pledge on the basis of the request of the pledge debtor or pledge creditor. Deletion of pledged rights in the Central Registry system shall be effected on the day of receipt of a complete and proper order to delete the pledge.

Usufructuary right

The legal basis for entering the usufructuary right on the basis of securities may be a law, a court's decision or other competent authority and a contract. Deletion of the usufructuary right on securities can be carried out on the basis of an order of the securities holders or the one entitled to usufruct. The procedure for enrolment of the usufructuary right, as well as the deletion of this right, shall be carried out in accordance with the provisions of the Rulebook on the registration and deletion of the pledge.

Prohibition or restriction of the right of disposal and rights in respect of securities

Prohibition or restriction of the right of disposal and the right in respect of securities can be entered and deleted on the basis of the law or the court's decision or request of any other competent authority.

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Aleksandar Sajic's picture

Aleksandar Sajic is a Founder and Director of the Law Firm SAJIC. Aleksandar graduated from the University of Banja Luka School of Law in 1997, and independent law practice started in 2000 in the joint office "Sajic Stojanka i Sajic Aleksandar" which in 2003 changed its form to the partnership.

Aleksandar is a member of the European Association of Attorneys (AEA), Union Internationale des Avocats (UIA), International bar association (IBA), International Law Association (ILO) and in professional legal guides he is recognized as a leading expert in these areas of law.

In addition to commercial law, M&A, stock exchange law and insurance law, Aleksandar also deals with issues of minority shareholders, PPP and legal risk assessment. In these areas of law, he advises and represents clients before courts and other competent authorities.