PLEDGE GUARANTEE UNDER TURKISH LAWS

Under Turkish law, pledge of movables, in principle, requires two steps:  

(i) the creation of a pledge agreement (which does not, generally, need a special form), and 

(ii) the delivery to and possession of the pledged collateral by the pledgee.  Perfection is achieved upon delivery of the pledged movable property.

Turkish law does not provide for specific circumstances or conditions by which a pledgee takes possession of a pledged movable asset.  Generally, a pledgor must transfer control over the collateral for the pledgee to acquire possession.  The pledgor may accomplish this by actual delivery of the collateral to the pledgee or by transferring the means or vehicles by which the pledgee may have control over the collateral.

Should the pledgor default under the pledge agreement, the pledgee shall have the right to foreclose on the pledged movable property.  The foreclosure proceeding is governed by the provisions of the Turkish Code of Execution and Bankruptcy.  The foreclosure proceedings are carried out by the execution office.  The pledgee may not acquire direct title to the pledged property pursuant to the lex commissoria prohibition of Turkish law or directly sell the same to third persons.