Zimbabwe News Update
zifmstereo
2 min read
Ashley mabiginye and fungai chimwamurombe the movable property security interests act [chapter 14:15] (hereafter referred to as “the act”), which came into effect on november 4, 2022, represents a significant shift in the legal framework governing the use of movable property as collateral for credit in zimbabwe. By establishing acollateral registrywithin the reserve bank of zimbabwe, the act aims to streamline and enhance access to credit for individuals and businesses alike. This article will explore the notable changes introduced by the act, analyze their implications, and address potential concerns regarding the protection of existing creditors’ rights.
The introduction of the collateral registry prior to the enactment of the act, the primary mechanism for using movable property as collateral involved the registration of a notarial bond at the deeds registry. This process, while functional, presented various challenges that often hindered access to credit. The introduction of the collateral registry is designed to alleviate these challenges by providing a more efficient and accessible platform for registering security interests. Under section 3 of the act, the registration of security interests via notarial bonds in the deeds office has been explicitly prohibited. Instead, all security interests must now be registered with the collateral registry.
This shift not only modernizes the approach to securing credit but also aligns zimbabwe’s legal framework with international best practices in secured transactions. Moreover, the act recognizes security interests in future assets and undivided interests, which further expands the potential for businesses and individuals to leverage their movable property for financial gain. The requirement for registration through a notice at the collateral registry is a crucial aspect of this process, ensuring that all interests are recorded and publicly accessible. Security agreements and registration requirements a security interest is created when a debtor and creditor enter into asecurity agreement.
The act mandates that this agreement must be in writing and signed by both parties, clearly describing the collateral involved. This requirement emphasizes the importance of clarity and mutual consent in securing transactions, which is essential in mitigating disputes. The registration process itself is designed to be user-friendly. Debtors must authorize the registration of a notice in writing, and any amendments to this notice similarly require their consent. The public nature of the registry allows any individual or entity with a user account to submit notices, thereby enhancing transparency and confidence in the system. A registered notice is effective from the time it is entered into the registry, and it can be extended for a period of six months prior to expiration.
This provision is critical for maintaining the currency and relevance of security interests in an ever-evolving financial landscape. Priority of security interests source: zifm stereo
