In most legal systems, the need for perfection arises only in relation to security interests that are proprietary in nature (such as a mortgage or equitable charge).
In India, Section 125 of the Companies Act, 1956 provides that certain charges shall be void against liquidator or creditors unless registered.
For example, under a common-law pledge (or pawn), the right to enforce the sale of the asset is contingent upon the possession of that asset: an agreement that leaves the debtor in possession of the pledged collateral does not give rise to an enforceable security interest.
The law relating to perfection of security interests by taking of possession can sometimes be confused with the law relating to the granting of security interests, which provides that the deposit of certain assets (usually documents of title) can amount to an equitable mortgage of the goods.
Most countries have systems for the registration of security relating to land, aircraft, ships and intellectual property rights.
One particular note regarding the perfection of security interests in a patent is an illustration of this issue of miscommunication.
However, because many registration systems do not require all types of security interest to be registered gaps can remain.
[12] In some legal systems, perfection of a security interest requires notice to be given to a relevant third party.