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Article 310. The Emergence of the Right to Pledge

1. Unless it is otherwise stipulated in the pledge agreement, the right to pledge shall arise in respect to the property, the pledging of which is subject to registration, - from the moment of the registration of the agreement, and in respect of other property, - from the moment of the transfer of that property to the pledge holder, and where it is not subject to transfer, from the moment of concluding the pledge agreement.

2. The right to pledge goods in circulation shall arise in accordance with the rules of paragraph 2 of Article 327 of this Code.

Article 311. Subsequent Pledge (Re-Pledge)

as amended by (12) Law of No. 211 of 2nd March 1998 of the Republic of Kazakhstan. Concerning the Introduction of Amendments and Additions to the Civil Code of the Republic of Kazakhstan (General Part), and to the Decree of the Supreme Soviet of the Republic of Kazakhstan "Concerning the Implementation of the Civil Code of the Republic of Kazakhstan (General Part)".

1. When pledged property becomes subject to another pledge to secure any other claims (re-pledge), then the claims of the subsequent pledge holder shall be satisfied from the value of the pledged item after the satisfaction of the claims of previous pedgeholders.

2. Re-pledge shall be allowed unless it is prohibited by the previous pledge agreements.

3. The pledger shall be obliged to communicate to each subsequent pledge holder information concerning all the existing pledges of that property and he shall be liable for losses inflicted upon the pledge holders by failure to execute that duty.

Article 312. Maintenance and Safety of Pledged Assets

1. The pledger or the pledge holder, depending on which of them keeps the pledged property, unless it is otherwise stipulated in legislative acts or the agreement, shall be obliged as follows:

1) to adopt measures which are required to ensure the safety of pledged property including for its protection from encroachments and claims by third parties;

2) immediately notify the other party of the emergence of a threat of losing or damaging pledged property.

2. The pledge holder and the pledger shall have the right to check against documents and to verify the physical presence, size, status and conditions of storage of pledged assets which are kept by the counter party.

3. In case of a gross violation by the pledge holder of the obligations indicated in paragraph 1 of this Article, which creates the threat of loss or damage to pledged property, the pledger shall have the right to claim a premature termination of the pledge.

Article 313. The Consequences of a Loss or Damage to Pledged Assets

1. A pledger shall bear the risk of an accidental destruction or damage to pledged assets, unless it is otherwise stipulated in the pledge agreement.

2. A pledge holder shall be responsible for a full or partial loss or damage of the pledged item entrusted to him, unless he proves that he may be exempt from the responsibility in accordance with Aarticle 359 of this Code.

3. A pledge holder shall be responsible for the loss of a pledged item in the amount of its actual value, and for any damage to it, - in the amount by which that value was reduced, irrespective of the amount at which the pledged item was evaluated when it was transferred to the pledge holder.

4. If as a result of damage to a pledged item, it has changed so much that it may not be used in accordance with its direct designation, the pledger shall have the right to reject it and to claim compensation for its loss.

5. The agreement may envisage the obligation of the pledge holder to also compensate the pledger for any other losses inflicted by the loss or damage to the pledged item.

6. A pledger who is the debtor in an obligation secured with pledge shall have the right to offset a claim of compensation for losses caused by the loss or damage to the pledged item against the pledge holder, as repayment of the obligation secured with the pledge.

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