Montenegro

Security interest law in Montenegro

1. Can an intercompany guarantee be granted?

1.1 Upstream?	Yes
1.2 Downstream?	Yes
1.3 Lateral?	Yes
2. Can a guarantee be given under foreign law (e.g. English law)?	Yes, however, it will not have legal effect if it is not registered according to Montenegrin laws. Also, there is exclusive jurisdiction of the Montenegrin laws and courts when the immovable located in Montenegro is subject of the contractual relations.
3. Any special arrangements (e.g. to deal with transfer pricing/corporate benefit)?	No

4. Can a security interest be granted in the following type of asset?

4.1 Real property	Yes
4.2 Shares (privately held)	Yes
4.3 Shares (marketable securities)	Yes
4.4 Receivables	Yes
4.5 Bank account	Yes
4.6 IP/Trademark	Yes
4.7 Equipment/Plant/Machinery	Yes
4.8 Inventory	Yes
4.9 Insurance	Yes
4.10 Rights under a contract	Generally yes, but certain types of personal rights cannot be transferred or granted as a security.
5. Can security interests be granted to a foreign lender?	Yes
6. Can multiple security interests be granted over the same asset?	Yes
7. Can a security interest be granted to secure liabilities of a holding company, a subsidiary or any other affiliate?	Yes

8. In order to be enforceable against third parties, must a security interest be?

8.1 Notarised?	Yes
8.2 Registered?	Yes
8.3 Other?	Recommended to stipulate in the agreement the clause of enforceability before the Notary Public, for any contractual obligation.
9. Does registration in most cases protect the secured creditor against the debtor’s subsequent dealings with the secured asset?	Yes, according to the principles of transparency and reliability.
10. Is there any stamp or similar tax or duty payable on the security document?	Yes

11. For a security interest to be legally enforceable which items must be filed as part of the registration or notarisation process?

11.1 Entire security agreement?	Yes
11.2 Names of pledgor and pledgee?	Yes
11.3 Description of secured asset in general terms?	Yes
11.4 Description of each individual secured asset?	Yes
11.5 Documents concerning ownership of secured asset?	Yes
11.6 Documents concerning debt in respect of which the asset is being secured?	Yes

12. Can a right to enforce security arise:

12.1 When the secured debt is unpaid and due?	Yes
12.2 When there is some other breach of the pledge/security agreement?	Yes
12.3 When the debtor becomes insolvent?	Yes
13. Can the creditor enforce its security interest by taking possession of the asset and selling it without court assistance?	Yes, if an extrajudicial sale was stipulated in the written agreement between the creditor and debtor.
14. Is an instrument for direct enforcement necessary/available/market practice?	Yes, see 8.3 above.
15. Are powers of attorney to the secured party used to facilitate a sale of secured assets in an enforcement situation?	Yes, the extrajudicial sale is commonly organised by authorised third parties.
16. If a sale is permitted without court assistance does it have to be made by public auction?	Yes
17. Can a transfer of all or part of the debt be made without affecting the security over the assets?	Yes, as long as parties do not agree on the expiry, termination or transfer of the security.
18. Is there anything else of which a lender should be aware as unusual or particularly difficult?	Written communication and notifications between parties is a problem due to imprecise legal provisions. Precision is recommended in the main agreement(s) and communication channels to avoid any prospective appeals or complaints by the debtor.