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In Republic of Korea, the publicity of security rights in personal property except for high value property such as vehicles, construction equipments, ships and aircraft as well as intellectual property including copyright, trademark, patent has not worked efficiently to notify the existence of security rights to third parties.
The problems of existence of secret security rights and high risk subject to other claims may be raised in Korean secured transactions, because publicity has not been functioned as designed to protect the third parties from other potential rights on the same encumbered assets. In the result of high risk, the cost of secured transactions has been high and the flexibility of currency
circulation has rarely been found in Korean secured transactions. In order to solve these problems, law reform of secured transactions in Korea should be considered to introduce new movables security rights registry system.
The pledge is not useful to attach security rights on inventory, equipment or other most goods because it deprive grantor of a possession. Factory foundation mortgage or mine foundation mortgage is rarely used as a consequence of the defectiveness in itself with the complicated registration procedure, so they must be abolished.
With the above reasons, even though transfer of title or retain of title should be able to play the role of security right on personal property in Korean economy, they hardly function as a security right because the publicity mode, indirect possession of them, can not present any essential information regarding the existence of security rights on the collateral. Therefore indirect possession should be replaced as another publicity mode that gives the necessary information in connection with secured transactions.