MOVABLE PROPERTY (SECURITY INTERESTS) ACT
ARRANGEMENT OF SECTIONS
SECTION
PART I
Preliminary
1. Short title and commencement
2. Interpretation
3. Application of Act
4. Conflict of laws
5. Party autonomy and standards of conduct
PART II
Collateral Registry Office and Collateral Registry
6. Collateral Registry Office
7. Appointment of officers of Collateral Registry Office
8. Functions of Collateral Registry Office
9. Collateral Registry
10. Integrity of information in Registry
11. Public access to Registry records
12. Debtor’s authorisation for registration
13. Single notice sufficient for multiple security agreements
14. Procedure for registration, indexing of information, etc.
15. Information required for initial notice
16. Effect of registration
17. Obligation to provide proof of registration
18. Duration of registration of notice
19. Registration of amendment or cancellation notice
20. Compulsory registration of amendment or cancellation notice
21. Error in required information by registrant
22. Change in identification of debtor after registration
23. Post-registration transfer of collateral
24. Evidentiary provisions
25. Fraudulent notice
26. Submission of frivolous or malicious notice
PART III
Security Interests
27. Creation of security interests
28. Provisions applicable to collateral
29. Provisions applicable to obligations
30. Security interest in accounts receivable
31. Continuation of security interest after transfer
32. Continuation of security interest in proceeds
33. Extinguishment of security interests
34. Tangible assets commingled in mass or made into product
35. Tangible assets covered by negotiable documents
36. Tangible assets and intellectual property used
PART IV
Perfection of Security Interests
37. Primary methods for perfection of security interests
38. Perfection of security interest in proceeds
39. Perfection of security interest in mass or product
40. Perfection of security interest in negotiable documents and related tangible assets
41. Perfection of security interest in consumable goods
42. Perfection of security interest in money
43. Perfection of security interest in deposit accounts
44. Perfection of security interest in agricultural produce
45. Transfer of perfected security interests
46. Lapses in perfection
47. Change in method of perfection of security interest
PART V
Priority of Security Interests and Third Party Interests
48. Priority of security interests in same collateral
49. Priority of security interest transferred by debtor
50. Priority of security interest in proceeds
51. Competing security interests in mass or product
52. Priority of security interest in accessions
53. Priority of acquisition security interest in fixtures
54. Competing acquisition security interests
55. Acquisition security interests in proceeds
56. Competing acquisition security interests in mass or product
57. Non-acquisition security interests competing with acquisition security interests
58. Buyers or other transferees, lessees and licensees of collateral
59. Security interests competing with rights of non-consensual creditors
60. Priority of statutory liens
61. Subordination of priority
62. Future advances and future collaterals
63. Knowledge of security interest irrelevant
64. Negotiable instruments and negotiable documents
65. Possession of money subject to security interest
66. Deposit accounts
67. Payment of debt through payment systems
68. Taking possession of securities
PART VI
Enforcement of Security Interests
69. Post-default rights
70. Methods of exercising post-default rights
71. Relief for non-compliance
72. Right of redemption
73. Right of higher ranking secured creditor to take over enforcement
74. Right of secured creditor to obtain possession of collateral
75. Secured creditor rendering collateral unusable
76. Right of secured creditor to dispose of collateral
77. Duty of secured creditor disposing of collateral
78. Distribution of proceeds after disposition
79. Proposal to acquire collateral
80. Objection to proposal to acquire collateral
81. Rights acquired in collateral
82. Debtor may reinstate security agreement
83. Direct collection of payment
84. Collection of payment by outright transferee of account receivable
PART VII
General Provisions
85. Classification of assets
86. Secured creditor to provide information to debtor
87. Obligations of parties in possession
88. Exemption from liability for actions or omissions
89. General penalties
90. Regulations
Act 5, 2022.
An Act to provide for the facilitation of the use of movable property as collateral for credit facilities; for the establishment of the Collateral Registry Office and the Collateral Registry; for a comprehensive registration regime of security interests in movable property; for determination of priority between security interests in movable property; and for matters incidental thereto or connected thereto.
[Date of Commencement: On Notice]
PART I
Preliminary (ss 1-5)
1. Short title and commencement
This Act may be cited as the Movable Property (Security Interests) Act, and shall come into operation on such date as the Minister may, by Order published in the Gazette, appoint.
In this Act, unless the context otherwise requires—
"account debtor" means a person who is obligated under an account receivable, and includes a guarantor or other person secondarily liable for payment of the account receivable;
"acquisition security interest" means—
(a) a security interest in a tangible asset or intellectual property, which secures an obligation to pay any unpaid portion of the purchase price of the tangible asset or intellectual property, or other credit extended to enable a debtor to acquire a right in such tangible asset or intellectual property to the extent that the credit is used for that purpose;
(b) the security interest of a lessor of a tangible asset under a lease for a term of one year or more; or
(c) the security interest of a consignor who delivers a tangible asset to a consignee under a commercial consignment, but does not include a sale and lease-back to the seller;
"agricultural produce" means tangible assets of a debtor engaged in farming, and includes—
(a) crops or horticulture produce, whether future, growing, or severed from land, and after severance whether subjected to any treatment or manufacture;
(b) timber, both standing and growing;
(c) livestock, bees and poultry, and the produce and progeny thereof;
(d) game farming;
(e) aquatic assets produced in aquaculture operations;
(f) seeds, fertiliser and manure; and
(g) any other agricultural and horticultural produce, whether subjected to any treatment or process of manufacture;
"amendment notice" means a notice submitted to the Registry in the prescribed form to modify information contained in the related notice;
"as-extracted collateral" means any—
(a) minerals or petroleum that are subject to a security interest that is created by a debtor having an interest in the minerals or petroleum before extraction, and that attached to the minerals or petroleum as they are extracted; or
(b) payment obligations arising out of a sale, at a mine-head or wellhead, of minerals or petroleum in which the debtor had interest before extraction;
"cancellation notice" means a notice submitted to the Registry in the prescribed form to cancel the effectiveness of the registration of all related registered notices;
"collateral" means—
(a) a movable property that is subject to a security interest; or
(b) an account receivable that is subject to an outright transfer by agreement;
"commercial consignment" means a consignment where—
(a) a consignor has reserved a security interest in a tangible asset that the consignor has delivered to the consignee for the purpose of sale, lease or other disposition; or
(b) both the consignor and the consignee deal in the ordinary course of business in the assets of that description,
but does not include an agreement under which assets are delivered to an auctioneer for the purpose of sale;
"competing claimant" means a creditor of a debtor or other person with a right in the collateral that may be in competition with the right of a secured creditor in the same collateral, including—
(a) another secured creditor of the debtor that has a security interest in the same collateral;
(b) another creditor of the debtor that has a right in the same collateral;
(c) the insolvency representative under the Insolvency Act (Cap. 42.02); or
(d) a buyer or other transferee, lessee or licensee of the collateral;
"consumer goods" means goods that are used or acquired for use primarily for personal, domestic or household purposes, but does not include a serial-numbered vehicle;
"control agreement" means an agreement in writing among a deposit-taking institution, a secured creditor and a debtor, pursuant to which the deposit-taking institution agrees to follow instructions from the secured creditor with respect to the payment of funds credited to the deposit account without the further consent of the debtor;
"debtor" means a—
(a) person that creates a security interest to secure its own obligation or that of another person;
(b) transferor in an outright transfer of an account receivable; or
(c) buyer or other transferee, lessee or licensee of a collateral that acquires its right subject to a security interest;
"deposit account" means a demand, savings or similar account maintained by a deposit-taking institution;
"deposit-taking institution" means a financial institution that is authorised to accept deposits under the Banking Act (Cap. 46:04);
"equipment" means a tangible asset, other than inventory or consumer goods, that is primarily used or intended to be used by a debtor in the operation of its business;
"finance lease" means a lease of a tangible asset where the—
(a) lessee automatically becomes the owner of the asset that is the object of the lease;
(b) lessee may acquire ownership of the asset by paying no more than a nominal price; or
(c) asset has no more than a nominal residual value;
"fixture" means a tangible asset that, despite the fact that it is physically affixed to immovable property, is treated as movable property;
"funds proceeds" means proceeds in the form of money, accounts receivable, negotiable instruments or funds credited to a deposit account;
"Government lien" means a tax or lien issued by the Government of Botswana;
"hire purchase agreement" means any agreement whereby goods are sold subject to the condition that the ownership in such goods shall not pass merely by the transfer of the possession of such goods, and the purchase price is to be paid in instalments, two or more of which are payable after such transfer; and includes any other agreement which has, or agreements which together have, the same import, whatever form such agreement or agreements may take:
Provided that any agreement which, or agreements which together, provide for the letting and hiring of goods—
(a) with the right to purchase such goods only after two or after more than two instalments subsequent to such transfer have been paid in respect of the goods; or
(b) with the right, after two or after more than two instalments subsequent to such transfer have been paid in respect of the goods, to continue or renew from time to time such letting and hiring at a nominal rental, or to continue or renew from time to time the right to be in possession of the goods, without any further payment or against payment of a nominal periodical or other amount,
shall, whether or not the agreement or agreements may at any time be terminated by either party or one of the parties, be deemed, for the purposes of this Act, to be of the said import;
"initial notice" means a notice submitted to the Registry in the prescribed form to perfect the security interest to which the notice relates;
"instalment sale agreement" means any agreement of purchase and sale whereby ownership in the goods sold passes upon delivery, and the purchase price is to be paid in instalments, two or more of which are payable after delivery, and under which the seller would be entitled to the return of the goods sold if the buyer fails to comply with any one or more provisions of the agreement; and includes any other agreement which has, or agreements which together have, the same import, whatever form such agreement or agreements may take;
"intangible asset" includes account receivable, deposit account, securities, negotiable instrument, negotiable document and intellectual property right, in an electronic form;
"intellectual property" means—
(a) any copyrights and related rights, as defined in the Copyright and Neighbouring Rights Act (Cap. 68:02);
(b) a mark, patent and industrial design, as defined in the Industrial Property Act (Cap. 68:03);
(c) a business name, as defined in the Registration of Business Names Act (Cap. 42:05); or
(d) any other related right;
"inventory" means any tangible assets that are held by the debtor for sale or lease in the ordinary course of business, including raw materials or work-in-progress, and includes materials used or consumed in a business;
"mass" means a tangible asset which results when one tangible asset is so commingled with one or more tangible asset that they have lost their separate identities;
"money" means bank notes and coins issued by the Bank of Botswana and notes and coins authorised as legal tender by any other country;
"movable property" means any tangible or intangible asset, other than immovable property;
"negotiable document" means a document of title, or a receipt such as a bill of lading or warehouse receipt, that embodies a right to delivery of a tangible asset and satisfies the requirement of negotiability under the law governing the document;
"negotiable instrument" means a bill of exchange, cheque or promissory note;
"non-consensual creditor" means a creditor that has obtained a right in collateral by operation of any law, including an order of a court or as a result of owed taxes and similar fees;
"notice" means an initial notice, an amendment notice or a cancellation notice;
"perfected security interest" means a security interest that has become effective against third parties by registration of a notice, possession of a tangible asset, the execution of a control agreement or temporarily perfected, as provided in this Act;
"possession", in relation to a secured creditor, means actual possession or control of tangible collateral by the secured creditor or such secured creditor’s agent;
"priority" means the right of a person in collateral in preference to the right of a competing claimant;
"proceeds" means identifiable or traceable movable property received as a result of sale, or other disposition, collection, lease or license of the collateral, revenues, dividends, distributions, insurance proceeds and claims arising from defects in, damage to, or loss of, the collateral or other disposition of the collateral, and includes proceeds derived from the sale, or other disposition, collection, lease or license;
"registrant" means a person who submits the prescribed Registry notice form to the Collateral Registry Office;
"registration number" means the unique number assigned to an initial notice by the Registry and permanently associated with that notice and any related notice;
"Registry" means the Collateral Registry established under section 9;
"Registry records" means the information in all registered notices stored by the Collateral Registry Office, consisting of all the records that are publicly accessible and the records that have been archived;
"secured creditor" means a—
(a) person in whose favour a security interest is created; and
(b) transferee under an outright transfer of an account receivable;
"secured obligation" means an obligation secured by a security interest;
"security" means a share or other interest in the property or enterprise of a citizen or foreign issuer;
"security agreement" means an agreement—
(a) between a debtor and secured creditor that creates or provides for a security interest, regardless of whether the parties have denominated it as a security agreement; and
(b) that provides for an outright transfer of an account receivable;
"security interest" means—
(a) a property right in movable property that is created by agreement to secure payment or other performance of an obligation, regardless of whether the parties have denominated it as a security interest, and regardless of the type of asset, the status of a debtor or secured creditor or the nature of the secured obligation; and
(b) the right of the transferee in an outright transfer of an account receivable;
"serial number" means the serial number located on the chassis or body frame of a motor vehicle or trailer;
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