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LAWS OF KENYA
MOVABLE PROPERTY SECURITY RIGHTS ACT
CAP. 499A
- Published in Kenya Gazette Vol. CXIX—No. 64 on 19 May 2017
- Assented to on 10 May 2017
- Commenced on 16 May 2017 by Movable Property Security Rights Act Commencement
- [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]
Part I – PRELIMINARY
1. Short title
This Act may be cited as the Movable Property Security Rights Act.2. Interpretation
In this Act, unless the context otherwise requires—"acquisition security right" means a security right in a tangible asset or intellectual property, which secures the obligation to pay any unpaid portion of the purchase price of the asset or other credit extended to enable the grantor to acquire it to the extent the credit is used for that purpose;"attachment to immovable property" means a tangible asset that, despite the fact that it is physically affixed to immovable property, it is treated as movable property;"Board" means the Board of Directors established under section 5 of the Business Registration Service Act (Cap. 499B);"Cabinet Secretary" means the Cabinet Secretary responsible for the registration of security lights;"collateral" means—3. Objects
The objects of this Act are to—4. Scope of application
5. Party autonomy and standard of conduct
Part II – CREATION OF A SECURITY RIGHT
6. Creation by execution of a security agreement
7. Obligations that may be secured and assets that may be encumbered
8. Description of collateral
9. Right to proceeds
10. Tangible assets commingled in a mass or product
A security right in collateral extends to commingled goods.11. Contractual limitations on the creation of a security right
12. Personal or property rights securing or supporting payment or other performance
13. Tangible assets covered by negotiable documents
A security right in a negotiable document extends to the tangible asset covered by the document, provided that the issuer of the document is in possession of the asset at the time the security right in the document is created.14. Tangible assets with respect to which intellectual property is used
A security right in a tangible asset with respect to which intellectual property is used does not extend to the intellectual property and a security right in the intellectual property does not extend to the tangible asset.Part III – THIRD-PARTY EFFECTIVENESS OF A SECURITY RIGHT
15. Method for achieving third-party effectiveness
A security right in any movable asset is effective against third parties if a notice with respect to the security right is registered with the Registrar.16. Proceeds
17. Transfer of a security right
18. Negotiable documents and tangible assets covered by negotiable documents
If a security right in a negotiable document is effective against third parties, the security right that extends to the asset covered by the document is also effective against third parties.Part IV – REGISTRATION OF NOTICES RELATING TO SECURITY RIGHTS
19. Establishment of the Office of the Registrar and the Registry
20. Integrity of information in the Registry
21. Removal of information from the Registry and archival
22. Limitation of liability of the Registrar
The Registrar or an officer acting under the authority of the Registrar cannot be held liable for anything done under the authority of this Act if that action or matter is done in good faith.23. Registry fees
The Registrar may charge the prescribed fees.24. Grantor’s authorization for registration
25. One notice sufficient for security rights under multiple security agreements
The registration of a single notice may relate to security rights created by the grantor under one or more security agreements with the same secured creditor.26. Procedure for registration of notice etc.
The procedure for registration of notice, access to information by the public, conduct of search and assigning of unique identifiers to grantors and secured creditors shall be as prescribed in the Regulations.27. Information required in an initial notice
28. Language of information in a notice
With the exception of the names and addresses of the grantor and the secured creditor or their representatives, the information contained in a notice shall be expressed in English.29. Time of effectiveness of the registration of a notice
30. Period of effectiveness of the registration of a notice
31. Obligation to send a copy of a registered notice
32. Right to register an amendment or cancellation notice
33. Compulsory registration of an amendment or cancellation notice
34. Search criteria and results
35. Errors in required information by the registrant entered in a notice
36. Post-registration change of grantor identifier
37. Post-registration transfer of the collateral
Part V – PRIORITIES
38. Competing security rights created by the same grantor
Subject to the other provisions of this Part, priority among competing security rights created by the same grantor in the same collateral is determined according to the time of registration.39. Competing security rights created by different grantors
A security right created by a grantor is subordinate to a security right in the same collateral created by another person if the grantor acquired the collateral subject to the security right created by the other person and made effective against third parties before the grantor acquired the collateral.40. Irrelevance of knowledge of the existence of a security right
Knowledge of the existence of a security right in favour of another person on the part of a secured creditor does not affect its priority under this Act.41. Future advances and future collateral
42. Priority of a security right in proceeds
If a security right in proceeds of the collateral is effective against third parties as provided in section 16, the priority of the security right in the proceeds is determined using the same date used to determine the priority of the security right in the collateral.43. Priority of security rights in tangible assets commingled in a mass or product
44. Priority of security rights in attachments to immovable property
45. Rights of buyers or other transferees, leases or licences of collateral
46. Rights of non-consensual creditors
47. Non-acquisition security rights competing with acquisition security rights
An acquisition security right in consumer goods, equipment, inventory, or intellectual property has priority as against a competing non-acquisition security right created by the grantor, provided that a notice with respect to the acquisition security right is registered with the Registrar before the grantor obtains possession of the asset or acquires a right in intellectual property.48. Competing acquisition security rights
An acquisition security right of a seller or lessor has priority over a competing acquisition security right of a secured creditor other than a seller or lessor.49. Acquisition security rights in proceeds
50. Acquisition security rights in tangible assets commingled in a mass or product
An acquisition security right in a tangible asset that extends to commingled goods and is effective against third parties has priority over a non-acquisition security right granted by the same grantor in the commingled goods.51. Subordination
52. Negotiable instruments
A consensual transferee of an encumbered negotiable instrument acquires its rights free of the security right that is made effective against third parties by registration of a notice if the consensual transferee—53. Rights to payment of funds credited to a deposit account
A transferee of funds from a deposit account pursuant to a transfer initiated or authorized by the grantor acquires its rights free of a security right in the right to payment of funds credited to the deposit account, unless the transferee has knowledge that the transfer violates the rights of the secured creditor under the security agreement.54. Money
A transferee that obtains possession of money that is subject to a security right acquires its rights free of the security right, unless that transferee has knowledge that the transfer violates the rights of the secured creditor under the security agreement.55. Securities
A transferee of securities who takes possession of the certificated security or acquires rights in an electronic security and gives value without knowledge that the sale or other transfer is in violation of the rights of the secured creditor under the security agreement acquires its rights free of a security right.Part VI – RIGHTS AND OBLIGATIONS OF THE PARTIES AND THIRD-PARTY OBLIGORS
56. Obligation of a person in possession to exercise reasonable care
A grantor or secured creditor in possession of the collateral shall exercise reasonable care to preserve the asset.57. Obligation of a secured creditor to return the collateral to register an amendment or cancellation notice
On termination of a security right in the collateral the secured creditor shall register an amendment or cancellation notice as provided in sections 33.58. Right to inspect the collateral
A secured creditor has the right to inspect the collateral in the possession of the grantor or another person.59. Protection of the debtor of the receivable
Except as otherwise provided in section 11, the creation of a security right in a receivable does not affect the rights and obligations of the debtor of the receivable, including the payment terms contained in the contract giving rise to the receivable, without the debtor's consent.60. Notification of a security right and payment of a receivable
61. Defences and rights of set-off of the debtor of the receivable
62. Modification of the original contract
An agreement concluded before notification of a security right in a receivable created by a security agreement between the grantor and the debtor of the receivable that affects the secured creditor’s rights is effective as against the secured creditor, and the secured creditor acquires corresponding rights.63. Recovery of payments made by the debtor of the receivable
The failure of the grantor to perform obligations under the contract giving rise to a receivable does not entitle the debtor of the receivable to recover from the secured creditor a sum paid by the debtor of the receivable to the grantor or the secured creditor.64. Rights as against the institution
Part VII – ENFORCEMENT OF A SECURITY RIGHT
65. Post-default rights
66. Methods of exercising post-default rights
A secured creditor may exercise its post-default rights by application to a court or in accordance with this Part, without applying to a court.67. Relief for non-compliance
68. Secured creditor's right to sue
69. Rights of redemption
70. Right of the higher-ranking secured creditor to take over enforcement
71. Right of the secured creditor to possession of the collateral
72. Right of the secured creditor to dispose of the collateral
73. Notice of disposition
74. Right of the secured creditor to distribute the proceeds of a disposition of a collateral
75. Acquisition of collateral in total or partial satisfaction of the secured obligation
76. Rights acquired in collateral
77. Collection of payment under a receivable, negotiable instrument, right to payment of funds credited to a deposit account or security
78. Collection of payment under a receivable by an outright transferee
In the case of an outright transfer of a receivable, the transferee is entitled to collect the receivable before or after default of the transferor.Part VIII – APPLICABLE LAW
79. Law applicable to the mutual rights and obligations
The law applicable to the mutual rights and obligations of a grantor and a secured creditor arising from their security agreement is the law chosen by them and, in the absence of a choice of law, the law governing the security agreement.80. Law applicable to a security right in a tangible asset
81. Law applicable to a security right in an intangible asset
82. Law applicable to the enforcement of a security right
The law applicable to issues relating to the enforcement of a security right—83. Law applicable to a security right in proceeds of the collateral
84. Meaning of location of the grantor
For the purposes of the provisions of this Part, the grantor is located—85. Relevant time for determining location
86. Law applicable to the relationship of third parties and secured creditors
The law applicable to the relationship between the grantor of a security right in a receivable, negotiable instrument or negotiable document and the debtor of the receivable, the obligor under the negotiable instrument or the issuer of the negotiable document is the law applicable to—87. Continuity in third-party effectiveness upon a change of the applicable law to this Act
Part IX – GENERAL PROVISIONS
88. Cabinet Secretary to make regulations for purposes of this Act
89. Transitional application of this Act
90. Inapplicability of this Act to actions commenced before its coming into force
91. Creation of a prior security right
92. Third-party effectiveness of a prior security right
93. Priority of a prior security right
94. [Spent]
History of this document
31 December 2022 this version
Revised by
24th Annual Supplement
19 May 2017
16 May 2017
Commenced by
Movable Property Security Rights Act Commencement
10 May 2017
Assented to
Cited documents 17
Act 17
1. | Companies Act | 1531 citations |
2. | Insolvency Act | 593 citations |
3. | Traffic Act | 566 citations |
4. | Banking Act | 349 citations |
5. | Civil Aviation Act | 163 citations |
6. | Stamp Duty Act | 151 citations |
7. | Copyright Act | 113 citations |
8. | Consumer Protection Act | 98 citations |
9. | Sacco Societies Act | 83 citations |
10. | Industrial Property Act | 77 citations |
Documents citing this one 32
Judgment 29
Act 3
1. | Companies Act | 1531 citations |
2. | Insolvency Act | 593 citations |
3. | Hire-Purchase Act | 11 citations |
Subsidiary legislation
Title
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Date
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The Movable Property Security Rights (General) Regulations | Legal Notice 86 of 2017 | 31 December 2022 |