Collateral Registry

  1. Collateral Registry – The collateral registry is a body established by parliament under the borrowers’ ACT 2008 [ Act 773] to primarily register charges and collaterals created by borrowers to secure credit facilities provided by lenders.
  2. What is a charge – A Charge according to Act 773 constitutes charge, mortgage, security interest, lien, pledge, assignment by way of security, covenant, restriction, reservation, lease, trust, order, decree, judgment, title defect (including retention of title claim), or any other encumbrance of any nature other than liens arising by operation of law
  3. What is a collateral – A Collateral is any property or other assets that a borrower offers a lender to secure a loan.
  4. Types of Collaterals – Movable properties such us Motor Vehicles, Inventories And Receivables, Investment Property, Business Assets, Household Assets, Machinery And Equipment, Livestock, Crops, Intellectual Property, Patent, License, Copyright, Goodwill, Financial Instrument, Bonds, Cash, etc. Immovable properties such as Land, Building, Farm Land, etc.
  5. Salient Points Of Act 773 - Registration of a charge or collateral of the collateral registry is mandatory and should be done within twenty-eight (28) days after the date of the creation of the collateral or charge. A lender should not conclude a credit agreement with a prospective borrower with pre-agreement statement and guarantee (see useful resources for template). A charge which is not registered is of no effect as security for a borrower’s obligations for repayment of the money secured, in effect an unsecure loan. Registration of satisfaction of debt is mandatory. It is mandatory for a borrower who has satisfied or made satisfactory arrangements regarding a loan to be discharged or realized of the said obligations by the lender in whole or in part for the debt for which the charge was created.
  6. Extensions – Registering promptly will enhance your priority rights. Ensure that registered collaterals or charge remains effective or valid of all times by remaining or extending the collateral or charge before it expires. Upon expiration, you risk losing your priority rights.
  7. Realisation – once a collateral or charge is clearly registered, it remains valid (not expired). A charge is not obligated to initiate proceedings in court to enforce the right of possession in the event of a default. However, a thirty (30) day demand enforce to the defaulter is required. The registration shall certify the realisation process by issuing a certificate to that effect.