A Brief Outline of the Newly Enacted Movable Property Security Rights Act
The Moveable Property Security Rights Act 2017 (the “Act”) was assented to by the President of Kenya earlier this year and came into operation on 16th May 2017.
Part II of the Act deals with the manner in which security rights are created through security agreements but it does not provide for the form of the security agreement. This will create uncertainty and inconsistency in the form that security agreements may take.
Part III of the Act provides for the registration of security rights over movable property with the Registrar of Security Rights which would in effect constitute a notice of the security interest to third parties.
Part IV of the Act establishes the office of the Registrar of Security Rights and sets out the procedure for conducting searches and registering notices, amendments and discharges. The Act provides for a maximum period of effectiveness of ten years which may be extended only within the six months preceding its expiry.
Part V of the Act provides for the priority among competing security rights. This part provides that a grantor may create more than one security right over a single collateral.
Part VI of the Act provides for the rights and obligations of parties to a secured transaction.
Part VII of the Act provides for the enforcement procedure for a party under a secured transaction.
Part VIII of the Act recognises the fact that a movable asset may be located in a different jurisdiction and provides for the applicable laws for secured transactions.
Part IX of the Act provides for general provisions including amendments and repealing of laws.
b) Without limiting the generality of paragraph (a) above, a chattel mortgage, credit purchase transaction, credit sale agreement, floating and fixed charge, pledge, trust indenture, trust receipt, financial lease and any other transaction that secures payment or performance of an obligation; and
c) An outright transfer of a receivable subject to some qualifications contained in part VII of the Act.The Act provides for a credit purchase transaction which is termed as a hire-purchase agreement, a conditional sale agreement, a chattel leasing agreement or a retention of title agreement.The Act further provides for a credit sale agreement which is defined as an agreement for the sale of goods under which payment of the whole or a part of the purchase price is deferred and a security interest in the goods is created or provided for in order to secure the payment of the whole or a part of the purchase price.
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