A PROCLAMATION TO PROVIDE FOR MOVABLE PROPERTY SECURITY RIGHT
A PROCLAMATION TO PROVIDE FOR MOVABLE PROPERTY SECURITY RIGHT
WHEREAS, modern secured transactions systems enable individuals and entities to use their movable assets as security for credit generating new productive capital and fostering access to and usage of finance;
WHEREAS, it is necessary to provide for the creation of security rights in movable property, ensure their publicity and effectiveness through efficient enforcement mechanisms;
WHEREAS, establishing single comprehensive electronic registration regime for secured transactions in movable property to determine priority rights among competing claimants is necessary;
NOW, THEREFOR, in accordance with Article 55(1) of the Federal Democratic Republic of Ethiopia Constitution, it is hereby proclaimed as follows:
1. Short Title
This Proclamation may be cited as “Movable Property Security Rights Proclamation No.. ……. /2019.
In this Proclamation, unless the context otherwise requires:
1/ “accessory to immovable” means a corporeal asset that despite the fact that it is physically affixed to an immovable is treated as movable property;
2/ “acquisition security right” ” means a security right in a corporeal 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 rights in the asset to the extent the credit is used for that purpose;
3/ “business” means a business specified under the Commercial Code of Ethiopia;
4/ “certificated securities” means a document evidencing ownership of share/bonds registered in the name of the holder or issued to a bearer;
5/ “Collateral Registry” means an electronic system for receiving, storing and making accessible to the public information about security rights and non-consensual rights in movable property;
6/ “Collateral Registry Office” means an office established to manage the Collateral Registry;
7/ “competing claimant” means a creditor of a grantor or other person with rights in the collateral that may be in competition with the rights of a secured creditor in the same collateral;
8/ “consumer goods” means goods primarily used or intended to be used by the grantor for personal, family or household consumption;
9/ “control agreement”
a) with respect to electronic securities means an agreement in writing among the issuer, the grantor and the secured creditor, according to which the issuer agrees to follow instructions from the secured creditor with respect to the securities without further consent from the grantor; or
b) with respect to rights to payment of funds credited to a deposit account means an agreement in writing among the financial institution, the grantor and the secured creditor, according to which the financial institution agrees to follow instructions from the secured creditor with respect to the payment of funds credited to the deposit account without further consent from the grantor;
10/ “corporeal asset” means all types of goods including money, negotiable instruments, negotiable documents and certificated securities;
11/ “debtor” means a person that owes payment or other performance of a secured obligation, whether or not that person is the grantor of the security right securing payment or other performance of that obligation, including a guarantor of a secured obligation;
12/ “debtor of the receivable” means a person that owes payment of a receivable, including a guarantor or other person secondarily liable for payment of the receivable;
13/ “deposit account” means an account maintained by a financial institution authorized to receive deposits from the public;
14/ “equipment” means a corporeal asset other than inventory or consumer goods that is primarily used or intended to be used by the grantor in the operation of its business;
15/ “electronic securities” means shares and bonds registered and transferable electronically but not represented by a certificate;
16/ “farm products” include but not limited to crops grown, growing or to be grown; forest, timber and other wood products; livestock, born or unborn, bees and poultry and the produce and progeny thereof; supplies used or produced in a farming operation; or products of crops or livestock in their unmanufactured states.
17/ “financial lease” means a type of leasing by which a lessor provides a lessee against payment of mutually agreed installments over a specified period with the use of specified capital goods under which the lessor shall retain full ownership right on the capital goods during the period of the lease agreement, and, subject to agreement between the two parties, the lessee may have an option to purchase the capital good outright after the termination of the lease period at an agreed price.
18/ “future asset” means a movable property, which does not exist or which the grantor does not have rights in or the power to encumber at the time the security agreement is concluded;
19/ “grantor” means a person that creates a security right to secure either its own obligation or that of another person; a buyer or other transferee, lessee, or licensee of the collateral that acquires its rights subject to a security right;
20/ “hire-purchase” means a type of leasing by which a lessor provides a lessee with the use of a specified capital goods, against payment of mutually agreed instalments over a specified period under which, with each lease payment, an equal percentage of the ownership is transferred to the lessee and, upon effecting of the last payment, the ownership of the capital goods shall automatically be transferred to the lessee;
21/ “incorporeal asset” means all types of movable property other than corporeal assets that shall include receivables, deposit accounts, intellectual property rights;
22/ “intellectual property” will have a meaning that is given to it in the intellectual property law;
23/ “inventory” means corporeal assets held by the grantor for sale or lease in the ordinary course of the grantor’s business, including raw and semi-processed materials;
24/ “mass or product” means corporeal assets that are so physically associated or united with other corporeal assets that they have lost their separate identity;
25/ “money” means bank notes and coins which are legal tender issued and minted by the National Bank of Ethiopia; and notes and coins which are legal tender in any country outside Ethiopia as to which the National Bank of Ethiopia has declared to be acceptable for payment in Ethiopia;
26/ “moveable property” includes inventories, agricultural products, incorporeal assets, corporeal assets, the right to use land unless prohibited by pertinent laws; properties excluding land, house and building, a security right under a hire-purchase agreement, security trust deed, trust receipt, commercial consignment, mortgage of a business, sale with ownership reserved, sale with right of redemption, security rights in certificated securities, and security rights in warehouse receipts;
27/ “negotiable document” includes a document, such as a bill of lading, way-bill, voucher or a warehouse receipt for goods warehoused that represents a right to delivery of corporeal assets and may be transferred by negotiation;
28/ “negotiable instrument” includes a bill of exchange, promissory note and other instruments except check issued to bearer, specified name or order;
29/ “non-consensual creditor” means a creditor that has obtained a right in the collateral, on the basis of a court order or applicable law;
30/ “notice” includes an initial notice, an amendment notice or a cancellation notice submitted to the Collateral Registry by the secured creditor or other authorized person under this Proclamation;
31/ “operating lease” means a type of leasing for a period of time not exceeding two years, by which a lessor provides a lessee against payment of mutually agreed rent with the use of specified capital goods that the lessor has at hand;
32/ “prior law” means the law in force before the entry into force of this Proclamation;
33/ “prior security right” means a right covered by a security agreement entered into before the entry into force of this Proclamation;
34/ “possession” means the actual possession of a corporeal asset by a person or its representative, or constructive possession by an independent person that acknowledges holding it for that person;
35/ “proceeds” means whatever is received in respect of the collateral, including what is received as a result of sale or other disposition or collection, lease or licence of the collateral, fruits, insurance proceeds, claims arising from defects in, damage to or loss of the collateral, and proceeds of proceeds;
36/ “receivable” means a right to payment of a monetary obligation, excluding a right to payment evidenced by a negotiable instrument, a right to payment of funds credited to a deposit account and a right to payment under security;
37/ “recognized market” means a market in which prices are stated publicly and/or presumed to be commercially reasonable;
38/ “registrant” means the person who submits the prescribed registry notice form to the Collateral Registry;
39/ “Registrar” means a person to be appointed by the government to supervise and administer the operations of the Collateral Registry;
40/ “records” means the information in all registered notices stored by the Collateral Registry, consisting of the records that are publicly accessible and the records that have been archived;
41/ “secured creditor” means a person that has a security right or non-consensual creditor.
42/ “security agreement” means an agreement, regardless of whether the parties have denominated it as a security agreement, between a grantor and a secured creditor that provides for the creation of a security right;
43/ “security right” means a property right in movable property that is created by an agreement to secure payment or other performance of an obligation, regardless of whether the parties have denominated it as a security right, and regardless of the type of property, the status of the grantor or secured creditor, or the nature of the secured obligation;
44/ “serial number” means the serial number located on the chassis or body frame;
45/ “serial-numbered collateral” means a motor vehicle, trailer, agricultural machineries, construction machineries or industrial machineries and others that have a serial number permanently marked on or attached by the manufacturer;
46/ “person” means natural or legal person.
47/ Any expression in the masculine gender includes the feminine.
3. Scope of application
1/ This Proclamation shall apply to all rights in movable property created by agreement that secure payment or other performance of an obligation regardless of the form of the transaction, type of movable property, status of the grantor or secured creditor or the nature of the secured obligation.
2/ This Proclamation shall not apply to:
a) security rights in securities traded on exchanges;
b) a mortgage of a ship with all accessories required for its use subject to the Maritime Code;
c) an interest in an aircraft subject to the registration by the Ethiopian Civil Aviation Authority; and
d) except as otherwise provided in this Proclamation, a lien or other interest given by law; and
e) security rights in proceeds of collateral if the proceeds are a type of asset that is outside the scope of this Proclamation to the extent that other laws applies to security rights in those types of asset and governs the matters addressed in this Proclamation.
3/ This Proclamation shall not prevent creation of an encumbrance in accessories to immovable under immovable property law.
Continue reading “A /DRAFT/ PROCLAMATION TO PROVIDE FOR MOVABLE PROPERTY SECURITY RIGHT”