Collateral Registry

  1. Collateral Registry – The collateral registry is a body established by parliament under the borrowers’ 2020 (Act 1052) to primarily register Security Interest and collaterals created by borrowers to secure credit facilities provided by lenders.
  2. What is a Security Interest – A Security Interest according to 2020 (Act 1052) constitutes 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. Types of Collaterals – Collateral may include movable property such as motor vehicles, inventory and receivables, investment property, business assets, household assets, machinery and equipment, livestock, crops, intellectual property, patent, license, copyright, goodwill, financial instruments (i.e. stocks, bonds, cash etc.) and immovable property such as land, building, farm land etc.
  4. Salient Points Of 2020 (Act 1052) - Registration of a Security Interest 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 Security Interest 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 Security Interest was created.
  5. Realisation – Once a security interest is registered it remains valid until discharged. A lender is not obligated is not to intitiate proceedings in court to enforce the right of poosession on the event of default. Howerver a 30 days demand enforce to the defaulter is required. The Registrar shall certify the realization processes by issueing a certifcate to that effect.