Lenders can no longer rely solely on land titles. Since the Movable Property Security Rights Act 2017 (MPSRA), Kenyan borrowers can pledge stock, equipment, receivables, and even intellectual property as collateral, provided the security right is properly created, registered, and enforced.
What is a security right under the MPSRA?
A security right is a property right in a movable asset that secures payment or performance of an obligation. The Act covers both possessory and non-possessory security, financial leases, and retention-of-title arrangements. Crucially, it introduced a single national electronic registry administered by the Business Registration Service, replacing the fragmented charges and bill-of-sale regimes.
How is a security right perfected?
Creation requires a written security agreement. Perfection, which gives the lender priority against third parties and insolvency administrators, is achieved by registration in the Movable Property Security Rights Registry. Priority generally follows the order of registration, which makes early filing a practical necessity rather than a formality.
What can go wrong without legal advice?
Common defects include describing the collateral too narrowly, registering against the wrong debtor identifier, and overlooking conflicting security already registered. On enforcement, lenders must follow the Act’s notice and sale procedures, shortcuts expose lenders to borrower claims and can delay realisation.
Our banking and securities team in Nairobi documents and perfects security rights for lenders and corporate borrowers. Contact us for a confidential consultation.