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By Njoroge Regeru & Company
Nairobi, Kenya

The Movable Property Security Rights Act, 2017 (“the Act”) was assented into law on 10th May, 2017.This new law will facilitate the use of movable property as collateral for credit facilities, establish the office of the Registrar of Security Rights and provide for the registration of security rights in movable property.

This Act will also benefit small and medium-sized enterprises which experience difficulty in accessing finance from the formal sector.


The Act has repealed the Chattels Transfer Act (Cap. 28) and the Pawnbrokers Act (Cap. 529.It has amended several sections of the Agricultural Finance Corporation Act (Cap. 323), the Stamp Duty Act (Cap. 480), the Hire Purchase Act (Cap. 507),), the Business Registration Services Act (Act No. 15 of 2015), the Companies Act, 2015 and the Insolvency Act, 2015.

The Objects of the Act

The Act is significant as it seeks; to enhance the ability of individuals and entities to access credit using movable assets and to promote consistency and certainty in secured financing relating to movable assets.

Significant Provisions of the Act

It is important to note that the Act, has brought with it significant provisions. These provisions are:

a)    Creation of a Security Right

A security right under the Act is created by a security agreement and provides that the grantor has rights in the asset to be encumbered or the power to encumber it. The security agreement must be in writing and signed by the grantor; it must also identify the secured creditor and the grantor, except in the case of an agreement that allows for the outright transfer of a receivable, it should also describe the secured obligation and the collateral.

b)    Types of Securities Created

The Act assists persons who do not own real (immovable) property to secure credit by facilitating borrowing against their various types of movable assets.  The Act provides that a security right can encumber the following:-

 i.  any type of movable asset, whether tangible or intangible, including future assets (a moveable asset which does not exist  or which the grantor does not have rights in or power to encumber at the time the security agreement is made;

ii. parts of assets and undivided rights in movable assets;

iii. generic categories of movable assets;

iv. all of a grantor’s movable assets; and

v.  choses in action.

The Act further defines a tangible asset to mean all types of goods which include: motor vehicles, crops, machineries and livestock whereas intangible assets include: Receivables, deposit accounts, electronic securities and intellectual property rights.

The assets encumbered or to be encumbered ought to be described in the security agreement in a manner that reasonably allows their identification.

c)    Registration of Notices Relating to Security Rights

The Act establishes the Office of the Registrar for purposes of receiving, storing and making accessible to the public information on registered notices with respect to security rights and the general running of the registry. The Registrar will be appointed by the Cabinet Secretary for National Treasury.

Section 20 of the Act has further adopted a regime of notice filing, under which a single initial notice can be registered, and under which many individual transactions will fall. The initial notice should contain; the identifier and address of the grantor, the identifier and notice of secured creditor, a description of the collateral and the period of effectiveness of the registration.

Section 30 provides that 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. Priority will be determined by the time of lodging the security for registration.

d)    Enforcement of a Security Right

In the event that there is failure to pay or perform the secured obligation, the grantor or secured creditor will exercise any right under the security agreement or that which is provided under any other law.

If there is default with respect to an obligation, the secured creditor should notify the grantor in writing to pay money owing or perform and observe the agreement. If the grantor does not comply within the period indicated in the notification after date of service of the said notification, the secured creditor will have the right to:-

  1. Sue for any money due  or owing under the agreement;
  2. Appoint a receiver of the income  of the moveable asset;
  3. Lease the moveable asset; or
  4. Take possession of the moveable asset


From the foregoing, the Act has introduced numerous advantages by enhancing access to credit facilities using moveable property as collateral which will benefit small and medium-sized enterprises. The Act, however, does not provide any mechanism to verify that a person who registers a notice on movable property in their name is the owner of the property. This could eventually lead to disputes around ownership pursuant to registration.

Further, the Act does not compel any banking institution or other lender to accept movable assets as collateral. The decision on whether to accept movable assets as collateral will remain within the bank or lender’s discretion pursuant to a full risk assessment and depending on the availability of funds for this purpose.