(the State Council Decree [2020] No.18, hereinafter referred to as the “Decision”), specifying that unified registration of movables security will be implemented nationwide from January 1, 2021. The Decision is an example of implementing and specifying the Civil Code and the Regulations on Improving the Business Environment, and marks the official implementation of unified registration of security interests over and rights in China.

The Decision specifies that since January 1, 2021, the People’s Bank of China will fully undertake the unified registration of security over movables and rights, and specifically the Credit Reference Center, the People’s Bank of China (“CCRC”) will undertake registration service. Market participants shall register and inquire about security over movables and rights independently in the Unified Movable Financing Registry System of CCRC through the Internet. Liability for the authenticity, integrity and legality of the registration contents shall be borne by the parties who handle the registration. The registry does not conduct substantive examination on registration contents, and does not require approval before registration.

The seven types of security over movables and rights included in the unified registration scope are: mortgage of production equipment, raw materials, work in process, and products; pledge of accounts receivable; pledge of certificates of deposit, warehouse receipts, and bills of lading; financial leases; factoring; retention of ownership; and other specific types. Mortgage of production equipment, raw materials, semi-finished products, and products was registered in the State Administration for Market Regulation before, but now it will be registered in the People’s Bank of China. New registration after January 1, and change and cancellation of the previous registration will be handled at the People’s Bank of China, and previous registration does not need to be re-registered. In order to ensure smooth transition, a two-year transition period is set for CCRC to receives historical registration data from the State Administration for Market Regulation. During the transition period, the statutory inquiry obligation is still undertaken by the State Administration for Market Regulation, while the Unified Movable Financing Registry System will provide auxiliary inquiry services for the convenience of the people. The People’s Bank of China and the State Administration for Market Regulation jointly issued an announcement on the transition plan after the adjustment of unified security registration services to jointly do a good job in data connection and transition.

After the implementation of the unified registration of security over movables and rights, market participants can register seven types of movable security in one system, and can easily know the security rights over all movables under the name of the collateral provider through one inquiry. It helps to make security rights more transparent, enhance the certainty of realization of the rights of the secured creditor, reduce the risk and cost of credit transactions, and increase lending willingness of financial institutions and other secured creditors.