The Moveable Property Security Rights Act 2017 extensively restates and reforms Kenyan law, providing for various ways in which personal property can be used as collateral for credit facilities. The objects of the 2017 Act are set out in Section 3 and include promoting consistency and certainty in secured financing over movable assets, and enhancing access to credit by using such assets. The 2017 Act adopts a unitary approach applying to any transaction to secure payment or performance without regard to its form over collateral (Sections 2 and 4). The 2017 Act reshapes Kenyan secured transactions law in a number of interesting ways.
First, the 2017 Act establishes a central registry to facilitate registration of security interests in personal property (Section 19). It adopts a regime of notice filing, under which a single initial notice can be registered, under which many individual transactions will fall (Section 25). A public registry will be established, permitting searches both by the identifier of the grantor of security, and by the serial number of the collateral (Section 34). Priorities will then fall to be determined generally by time of registration (Section 38). Further, it is worth noting that a security right will only be effective against third parties if a notice is registered with the public registry (Section 15) and the 2017 Act provides no other mechanism for perfection of security.
Second, the 2017 Act provides expressly for the creation of security over intellectual property (Sections 2 and 6). Security over an asset which uses intellectual property does not extend to those rights, and equally security over intellectual property does not extend to tangible assets which use it (Section 14). Whereas the Act does not generally make provision for the various features unique to intellectual property, such as the need to grant licences, the explicit recognition of intellectual property as a category over which security may be taken is to be welcomed.
Third, the 2017 Act provides for a defined regime of priorities between competing encumbrances. It deals with purchase money security interests (Sections 47-50), subordination (Section 51), and proceeds (Section 42), among other concepts.
Click here to access the 2017 Act.