In Korea, nonpossessory security interest cannot be created against personal properties because of the lack of proper notice. If personal properties and receivables are granted as security, its may be usually possessed and used by the debtor. In order...
In Korea, nonpossessory security interest cannot be created against personal properties because of the lack of proper notice. If personal properties and receivables are granted as security, its may be usually possessed and used by the debtor. In order to create such nonpossessory security rights, a public announcement of filing or perfection against third parties are required.
The collateral transferred for security is useful for the diversity of security and financing of enterprises. But it has some problems. First, the collateral transferred for security is a security interest according to custom. But an obligee has the title of collateral transferred for security, an obligor could use it and have interest in it. It can be recovered to its former state where repaid one’s debts. Second, due to not having legal ground, the basis of the collateral transferred for security theory is founded in theory that comprised of the collective theory, analytical theory, value scope theory, obligatory agreement theory, complex effect theory and so on. Among them, the collective theory is advocated by a majority.
In the collective theory, it is offered as security that made into one economic unit from several properties. This way to ensure a secure interest is contributed to elevation of efficiency by way of security. But, in Korea, the collateral transferred for security is in existence by case law, not having legal ground. In order to diversify a collateral offered as security in future, it is necessary to more widely employ the collateral transferred for security. Consequently, I think, we need make greater effort to study the collateral transferred for security.