REGISTRATION OF SECURITY RIGHT OVER MOVABLE PROPERTY IN KENYA
(MPSR: series 1)
Introduction
The Movable Property Security Rights Act, 2017 provides the legal framework that governs use of movable property as collateral in Kenya. This law seeks to promote consistency and certainty in secured financing relating to movable assets and enhance the ability of individual and entities to access credit.
Under the Act, movable asset means any tangible asset such as motor vehicles, crops, machineries or livestock or intangible asset such as receivables, choses in action, deposit accounts, electronic securities and intellectual property rights (e.g., copyright, trademark and industrial property right etc.).
The Act also defines a security right as a property right in a moveable asset that is created by an agreement to secure payment or performance of an obligation. It is created by a security agreement between the grantor/borrower and the secured creditor, provided that the grantor/borrower has rights in the asset to be encumbered.
In May 2017, Business Registration Service (BRS) established the Movable Property Security Rights (MPSR) Registry as the official government register of security rights in movable property. This MPSR registry replaced the Chattels Registry.
It is also worth noting that the MPSR Registry is a register of security rights in movable property and not a register of ownership. It is a registry that provides information to the public and especially lenders to know that the movable asset in question has security right over it.
Procedure and Requirements for creating a security over a movable asset
Creation of security over movable asset is done on eCitizen BRS portal.
The requirements are:
- Particulars of the Grantor/Borrower: Name, ID/Passport number, KRA pin, Post office address, email and phone number.
- Particulars of the creditor: Name, registration/incorporation details, KRA Pin, Post office address, email and phone number.
- Creditor’s authorized representative details e.g Advocates/director (Name, ID/Passport, KRA pin, phone number and Email address).
- Particulars of the collateral: Registration number/Identity details and full description.
- Particulars of the secured Loan: Loan amount, Period of effectiveness in months (Maximum is 120 months), Prior security if any.
- Information on whether consent of the grantor/borrower has been obtained.
NOTE: a disclaimer if the registration agent is not the creditor but he/she is acting as an agent of the creditor.
Once the above details are filled on the online portal, the NOTICE OF REGISTRANT OF INITIAL NOTICE Form 4 will be generated signifying registration of the security on the movable asset.
Applicable registration fees
At the time of writing this article the service was free of charge. However, things might change if the government of Kenya decides to impose a fee.
Importance of registration and creation of security over movable assets
The registration of security over movable property is important to financial institutions and other lenders as it cements the creditor’s right enabling them to give credit against all kinds of movable property thus facilitating advancement in commerce. Consequently, the registration notice will go a long way to prove credit and prior interest/advantage in term of registration time in case of dispute.
In our next insight series, we shall delve into the type of notices under MPSR, how to file the different notices and priority of rights.
At A.O.WANGA ADVOCATES we are happy to assist you with creating security over movable assets.
Contact us on info@aowangaadvocates.com or +254794600191.
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