Small and medium-sized enterprises (SMEs) often struggle to secure credit due to a lack of real estate, securities and other easily securitized assets. Recognizing this limitation, the State of Qatar recently established a modern, centralized Movable Collateral Registry to diversify the range of acceptable security interests, reshaping the credit landscape in the country.

This article reviews the legal foundation and operational procedures of the Qatar Movable Collateral Registry (“MCR”), administered by the Qatar Central Securities Depository, commonly known as Edaa (“Edaa” or “QCSD”). We also highlight a highly valuable practical precedent from our experience: the successful cross-border use of this mainland registry by a foreign lender/pledgee, on the one hand, and a borrower/pledgor registered in the Qatar Free Zones (“QFZ”), on the other hand.

Governing Laws: The Regulatory Shift

The mechanism for securing interests in non-real estate property is primarily governed by Law No. 16 of 2021 on the Regulation of Pledge over Movable Assets (the “MCR Law”), as well as Decision No. 1 of 2022 of the Qatar Central Bank Governor on the Procedures for Regulating the MCR (the “QCB Governor Decision”). This transformative piece of legislation provides a comprehensive, transparent framework for creditors, or secured parties, to formalize their claims over a debtor’s movable assets. The law’s objective is twofold: to provide certainty for lenders, and to allow borrowers to leverage the full value of their operating assets.

The Administrator: Edaa’s Role

Edaa is a financial company licensed by Qatar Financial Market Authority. It provides services such as clearing, safekeeping, settlement of securities and other financial instruments listed on the Qatar Exchange.

Under article 6 of the MCR Law, Edaa is designated as the implementing platform for the registration and publication of security rights over movables, ensuring creditor protection and maintaining a central searchable public database of such interests. Edaa oversees the operational administration and supervision of the MCR.

What is MCR and What Movable Assets Could Be Registered?

The MCR is an electronic public database that contains information on security interests over movable property. Pursuant to article 3 of the MCR Law, movable collateral is a broad category encompassing virtually all assets not classified as land or buildings, such as:

• Inventory and raw materials
• Machinery and equipment
• Accounts receivable (invoices owed to the debtor)
• Contractual rights and intellectual property
• Agricultural crops, animals, and their products
• Bonds and negotiable instruments, including commercial instruments and bank deposit certificates.

The Purpose/ Function of the MCR

The primary purpose of the MCR is to enhance market transparency by allowing pledgees to access information via MCR website and verify whether a particular asset has already been pledged. Article 3(2) of the QCB Governor Decision allows a pledgee to simply “search” the MCR database to confirm that an asset is not already encumbered by a security right over it to a former pledgee. This boosts lender confidence and mitigates risk. Ultimately, the MCR strengthens the infrastructure of financial instruments in the Qatari market, positioning Qatar as an attractive regional and global financial hub.

Registration and Perfection

For diligent lenders, the registration process is ideally preceded by searching the MCR database to confirm the absence of any prior registrations on the intended movable asset.

To make a security interest legally effective and enforceable against third parties, the following steps are required:

1. Execution of the Security Agreement: The debtor (pledgor) and the secured party (pledgee) must execute a definitive pledge over movables agreement in writing, clearly outlining the assets being pledged.
2. Open a User Account in the MCR Portal: Pledgee (acting directly or through its representative) must register as “user” in the MCR system, accepting the Edaa general terms, paying the required deposit, and providing required identification documents. Once approved, the user obtains access to the MCR services.
3. Submission of the Registration Request: The pledgee or the pledgor must then electronically submit a registration request via the Edaa platform, detailing the relevant parties and the pledged movable asset description. Under article 6 of the MCR Law, the pledgee is responsible for the registration fees, unless otherwise agreed.
4. Issuance of a Registration Certificate: Upon completion, the MCR issues an electronic certificate confirming the registration of the security interest.

Legal Effect and Priority: First-to-register Principle

Upon registration, the pledge becomes public and enforceable against third parties. Qatar follows the “first-to-register” principle. Under article 16 of the MCR Law, priority between competing security rights is determined primarily by the date of registration in the MCR. A secured creditor who registers its security interest first will generally have superior priority in the collateral and its proceeds, regardless of when the underlying debt was granted.

Enforcement Rights

In case a pledgee wishes to enforce the pledge, articles 27 and 29 of the MCR Law provide that a pledgee may enforce the pledge upon default through:

1. Contractual Enforcement: After notice to the Pledgor, by sale at a public auction; or
2. Judicial Enforcement: By application to the judge sitting in the executions circuit.

Can QFZ Entities’ Assets Be Registered in the MCR?

The MCR is a state-wide register for pledges over movable assets in the entirety of Qatar. Though there is no explicit carveout in the law excluding QFZ, some might assume that the assets of the entities registered with the Qatar Free Zones Authority (“QFZA”) may not be pledged in the MCR. This is complicated by the fact that the QFZA issued “the Collateral and Security Regulations” on 16 December 2020, which outlines the intent to establish a separate, dedicated movable collateral registry for the Free Zones created and maintained by the QFZA, accompanied by an FAQ Guide, which serves as supplementary guide to the regulations.  However, there is currently no evidence that such QFZ register is in force yet.

In all cases, article 40 of Law No. 34 of 2005 on Free Zones as amended by Decree Law No. 21 of 2017 and Law No. 15 of 2021 provide that “Save for what is inconsistent with the provisions of this Law and the Regulations, all the laws, Regulations, and civil rules applicable in the State will be applied to the Free Zones.”

Based on our firm’s successful precedent, we confirm that QFZ-registered entities can and should register their movable assets as collateral in the MCR. We believe this principle should equally apply to Qatar’s other sub-jurisdictions, such as the Qatar Financial Centre and the Qatar Science and Technology Park (QSTP).  

Conclusion

The MCR represents a major step forward for financing in Qatar. By allowing movable assets to be pledged as security, it provides lenders with clear, enforceable rights while enabling borrowers to unlock the value of their operational assets. The registry is transparent, centralized, and accessible through Edaa, ensuring confidence for all market participants.

GLA is a member of the MCR and has successfully registered a security interest over movable collateral on behalf of one of its clients.

Recommendations

Creditors and borrowers should actively utilize the MCR to register and search for pledges, ensuring priority and reducing risk. Further, QFZ-registered entities should register their movable assets in the mainland MCR to benefit from the same protection as mainland entities. Lastly, policymakers and stakeholders should continue to raise awareness of the MCR’s benefits to encourage wider adoption and improve market efficiency.

Authors: Maryam Tarek, Dean Jaloudi, Ashraf Hendi