Chattels Securities Act, 2014

Section Commencement Section This Act shall come into force on a date to be appointed by the Minister , by statutory instrument .

Section Interpretation Section In this Act, unless the context otherwise requires— " accessions " means goods that are installed in or fixed to other goods ; " cash proceeds " means proceeds in the form of money, cheques, drafts, and deposit accounts in a deposit-taking institution; " chattel " means any moveable property that can be completely transferred by delivery, and includes machinery , book debts, stock and the natural increase of stock , crops , wool or property in respect of which a valid document of title exists but does not include— (a) title deeds, choses in action or negotiable instruments; (b) shares and interests in the stock , funds or securities of any government or local authority; (c) shares and interests in the capital or property of any company or other corporate body; or (d) debentures and interest coupons issued by any government, or local authority, company or other corporate body; " chattel paper " means one or more documents that evidence— (a) a monetary obligation and a security interest in a lease of specific goods ; or (b) a lease of specific goods ; " chose in action " means a right which can be enforced in court ; " collateral " means personal proper...

Section Agreement giving power of distress by way of security to be instrument Section An agreement, not being a mining lease , in which a power of distress is given or agreed to be given by way of security , for present, future or contingent debt or advance, and in which any rent is reserved or paid as a means of providing for the payment of interest on the debt or advance, or for the purpose of security only, shall be an instrument covering chattels seized or taken under the power of distress. Notwithstanding subsection (1), where a mortgagee of an interest in land enters into possession of the mortgaged land, receives rent or profits in respect of the land, or transfers the land or any part of the land to the mortgagor at a fair and reasonable rent, the instrument in which the transfer is effected shall not be taken to be an instrument within the meaning of this Act.

Section Reservation of title Section A reservation of title by a secured party or a seller of goods , notwithstanding shipment or delivery, is limited in effect to the reservation of a security interest .

Section Collateral in possession or control of debtor Section A secured party does not have possession of collateral that is in the actual or apparent possession or control of a debtor or of an agent of a debtor .

Section Knowledge of fact in relation to particular transaction Section For the purposes of this Act, a person knows or has knowledge of a fact in relation to a particular transaction where that person— Cirumstances from which constructive notice under this section can be imputed shall include the following— has actual knowledge of the fact; or receives actual or has constructive notice of the factt, A person shall be deemed to have received constructive notice of a fact if the circumstances are such that, that person would be reasonably expected to have been aware of that fact. where an agent or employee of that person has actual notice of the fact; where notice is in respect of the existence of a security interest , the whole public shall be deemed to have constructive notice of that security interest upon registration of the relevant instrument .

Section Notice to be in writing Section A demand, notice or document is deemed to be sufficiently made or given where— A demand, notice or document made under this Act shall be in writing, and shall, in the case of a request made under section 15 , contain a postal address. in the case of a secured party named in a financing statement , it is delivered to that person or is left at the address of that person, as specified in the financing statement or is posted in a letter addressed to that person by name, at that address; or in the case of any other person, it is delivered to that person or is left at the usual or last known place of residence or business of that person or at an address specified for that purpose in the security document , or if it is posted in a letter addressed to that person by name, at the place of residence or business of that person. Where the person is absent from Uganda, the notice, demand or other document may be given to an agent of the person in Uganda; and where the person is deceased, it may be given to the personal representative of the deceased person. Where the person is absent from Uganda and has no known agent in Uganda, or is deceased and has no...

Section Conflict of laws Section The validity, perfection and effect of perfection or non­-perfection of a security interest is governed by the law of Uganda where— at the time the security interest attaches— the collateral is situated in Uganda; the collateral is situated out of Uganda but the secured party has knowledge that it is intended to be moved to Uganda; or the security agreement provides that the law of Uganda will be applied. Where a security interest to which the law of Uganda does not apply under subsection (1) has attached to collateral before the collateral is moved to Uganda, the security interest is taken to be perfected by registration under section 18 , if the secured party has complied with the requirements for enforceability of the security interest against third parties, in the jurisdiction where the security interest attaches.

Section Effectiveness of agreement creating security interest and duty of good faith Section Notwithstanding the provisions of this Act, an agreement to create a security interest is effective according to its terms, between the parties to it and is enforceable against a third party. A duty of good faith applies to both the debtor and the secured party .

Section Attachment of security interest Section A security interest in the nature of a floating charge does not attach unless— For the purposes of subsection (2)(c), a debtor has rights in goods which are— For the purposes of subsection (2) (c), a debtor does not have rights in— A security interest in the nature of a floating charge attaches to collateral when it becomes enforceable against a debtor . the parties agree to create the security interest ; value is given by the secured party ; and the debtor has rights in the collateral , A floating charge shall not seek to cover the assets of the debtor generally, but shall relate only to assets that are either ascertainable, ascertained or form a portion of a divisible stock or collection of assets whether similar or diverse and can be segregated from and exist separately from the stock or collection. Where a person possessing property claims a security interest in the property in the absence of a security document , the burden of proving the existence of an agreement to create a security interest lies with the person claiming the security interest . For the purposes of subsection (1), an agreement to create a floating charge is not...

Section Attachment of security interest in property after it is acquired Section Where an agreement provides for a security interest in property after the property is acquired, the security interest does not attach to consumer goods , unless— Subject to subsection (2), where an agreement provides for a security interest in property after it is acquired, the security interest attaches without specific appropriation by the debtor . the security interest is a purchase money security interest ; the consumer good is an accession; or the security interest is in collateral obtained by the debtor as a replacement for collateral which is the subject of the agreement.

Section Future advances Section An agreement to create a security interest may provide for future advances.

Section Rights and duties where collateral is in possession of secured party Section Unless otherwise agreed, where collateral is in the possession of the secured party — A secured party has a duty to use reasonable care to preserve collateral in his or her possession. In the case of a negotiable instrument or chattel paper , reasonable care referred to in subsection (1) includes taking necessary steps to preserve rights against prior parties, unless otherwise agreed. reasonable expenses, including the cost of any insurance incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral ; the risk of accidental loss or damage is on the debtor to the extent of any deficiency in any effective insurance cover; the secured party may hold as additional security , any increase or profits, except money received from the collateral , but money so received, unless remitted to the debtor , must be applied in reduction of the secured obligation; the secured party must keep the collateral identifiable, but fungible collateral may be mixed; and the secured party may repledge the collateral upon terms which do not impair th...

Section Secured party to supply information Section A debtor , a judgment creditor, a person with a security interest in the personal property of the debtor , or an authorised agent of any of these, may send to the secured party a request that the secured party approves or corrects and returns to the debtor an accompanying signed statement, which— The secured party shall, not later than ten working days after the day on which the request is received and any required fee is paid under subsection (4), whichever is the later— Where the secured party fails to comply with subsection (2), the court taking account of a reasonable excuse of the secured party , may make an order— specifies the aggregate amount of unpaid indebtedness, at a specified date; or where the collateral is identified, lists the collateral . subject to subsection (3), comply with the request by sending written confirmation or correction; and where the secured party no longer has an interest in the obligation or collateral at the time the request is received, send to the debtor a statement specifying the name and address of any successor in interest, known to him or her. Where the secured party claims a security inter...

Section Requirements for enforcement against third parties Section A security interest may be enforced against a third party, including a purchaser of the collateral , a creditor, a judgment creditor and a landlord distraining for rent, a trustee in bankruptcy, liquidator , receiver or administrator where— the debtor signs a security document that contains an identifying description of the collateral , which on its true construction indicates that the purpose of the agreement was the creation of a security over the collateral , except where the collateral is in the possession of the secured party , or in the possession of another person on behalf of the secured party , and the security interest is perfected. A security document referred to in subsection (1) may be in a form prescribed in regulations made under this Act.

Section Creation of security interest Section For a transaction to create a security interest , it shall— A security interest does not include— an interest created or provided for by— A security interest is created by a transaction that in substance secures payment or performance of an obligation, without regard to the form of the transaction, identity of the person who has title to the collateral , or whether title to the collateral is in the secured party . be intended only as security ; be a right that is enforceable against any person; be created by grant or declaration of trust and not by reservation; and expressly specify a restriction on the control by the debtor over the assets. a lien, charge or interest created by another Act; or a transfer of an interest or claim in or under a contract of annuity or policy of insurance, except as provided by this Act with respect to proceeds and priorities in proceeds ; a transfer of an unearned right to payment under a contract to a person who is to perform the obligations of the transferor under the contract; the creation or transfer of an interest in land; an assignment of receivables made solely to facilitate the collection of the re...

Section Perfection of security interest Section A security interest is perfected where— it is attached; and all steps required for perfection under this Act are completed regardless of the order in which the attachment and steps occur.

Section Perfection by registration Section Subject to section 17 , a financing statement shall be registered to perfect all security interests, except— a security interest in collateral in possession of a secured party under section 19 ; a security interest temporarily perfected for a period of ten days under section 20 ; a security interest in proceeds for a period of ten days under section 21 ; a security interest registered under the Chattels Transfer Act; and a security interest in consumer goods which are not vehicles, aircraft or vessels.

Section Perfection by possession of collateral Section Subject to section 17 , possession of collateral by a secured party or on behalf of the secured party, perfects a security interest in— chattel paper ; goods ; money; a negotiable document of title ; a negotiable instrument ; or a security , Subject to sections 20 and 21 , a security interest in money or a negotiable instrument, other than a certified security or a negotiable instrument which constitutes part of a chattel paper is perfected only by possession under subsection (1). Where a collateral is an uncertificated security , a secured party is deemed to take possession of the security when a transfer of the security to the secured party is registered. Where a collateral , other than goods covered by a negotiable document of title , is held by a bailee, the secured party is taken to have possession from the time the bailee receives notification of the interest of the secured party .

Section Temporary perfection where collateral is delivered or is available to debtor Section Subject to section 17 , a perfected security interest in a negotiable instrument or a security remains temporarily perfected for the first ten days after the day on which the secured party delivers the collateral to the debtor for the purpose of— A perfected security interest in a negotiable document of title or in goods held by a bailee and not covered by a negotiable document of title remains temporarily perfected for the first ten days after the day on which the secured party makes the collateral available to the debtor for the purpose of— Where a security interest temporarily perfected under subsection (1) or (2) is not perfected by another method before the expiration of the period referred to in those subsections— sale or exchange; presentation, collection or renewal; or registration of a transfer. loading, unloading, storing, shipping or trans-shipping; or manufacturing, processing, packaging or dealing with the goods in preparation for their sale or exchange. it becomes unperfected at the expiration of that period; and the provisions of this Act relating to the perfection of a secur...

Section Security interest in proceeds Section Subject to subsection (2), where collateral is dealt with to give rise to proceeds , the security interest — A security interest in proceeds is continuously perfected for the purposes of this Act where the security interest in the original collateral is perfected by the registration of a financing statement which contains— a description of the original collateral , if— Where the security interest in the original collateral was perfected by a method other than the method referred to in subsection (3), the security interest in the proceeds is continuously perfected for the purposes of this Act for the first ten working days after the day on which the security interest attached to the proceeds , but— continues in the collateral , unless the secured party expressly or impliedly authorises the dealing; and extends to the proceeds . Where the secured party enforces the security interest in both the collateral and the proceeds , the amount secured is limited to the market value of the collateral at the date of the dealing. a description of proceeds , if that description would be sufficient to perfect a security interest in an original collater...

Section Continuity of perfection Section A security interest originally perfected under this Act by one method and later perfected by another method, without an intermediate period during which it is unperfected, is deemed to be continuously perfected for the purposes of this Act. Where the secured party is a transferee, the security interest has the same priority as it has at the time of the transfer.

Section Protection of purchasers of goods Section A purchaser of consumer goods takes the goods free of a perfected security interest , if the purchaser— buys the goods without knowledge of the existence of a security interest , unless— A purchaser of goods sold other than in the ordinary course of business of the seller, takes the goods free of a security interest to the extent that it secures future advances made— For the purposes of this section— A purchaser of goods sold in the ordinary course of business of the seller, takes the goods free of a perfected security interest created by the seller, even if the purchaser is aware of the existence of the perfected security interest . gives new value for the interest acquired; and the purchaser buys motor vehicles in the ordinary course of his or her business; and the consumer good is a motor vehicle. after the secured party acquires knowledge of the sale; or more than twenty working days after the sale, a purchaser of goods includes a person who acquires possession of goods by sale, hire-purchase, under a contract for services or materials, barter, or under a lease ; a seller or purchaser sells or buys goods in the ordinary course o...

Section Protection of purchasers of chattel paper, negotiable instruments, documents of title and securities Section Nothing in this Act limits the right of— A purchaser of a chattel paper or negotiable instrument who gives new value and takes possession of the chattel paper or negotiable instrument in the ordinary course of business, has priority over a perfected security interest in the chattel paper or negotiable instrument if the purchaser does not know of the security interest at the time of taking possession. a holder in due course, of a negotiable instrument ; a holder to whom a negotiable document of title is duly negotiated; or a purchaser in good faith of a security ,

Section Priorities among conflicting security interests in same collateral Section Subject to this Act, priority among security interests in the same collateral is determined according to the following conditions— priority among perfected security interests is determined by the order of— For the purposes of subsection (1)— registration; possession; and temporary perfection under section 20 , a perfected security interest has priority over an unperfected security interest ; priority among unperfected security interests is determined by the order of attachment of the security interests. a continuously perfected security interest remains perfected by the method by which it was originally perfected; subject to section 21 , the time of registration, possession or perfection of a security interest in original collateral is also the time of registration, possession or perfection of the security interest in its proceeds; and a security interest has the same priority in respect of all advances, including future advances.

Section Priority of purchase money security interests Section A purchase money security interest in collateral has priority over any other security interest in the same collateral or its proceeds where— the purchase money security interest is perfected at the time the debtor receives possession of the collateral ; or the purchase money security interest is perfected not later than ten working days after the time the debtor receives possession of the collateral .

Section Priority where registration ceases to be effective Section Except as provided in subsection (2), the fact that the registration perfecting a security interest ceases to be effective as a result of— A competing perfected security interest has priority over a security interest in respect of which a financing statement is registered under subsection (1) to the extent that the competing security interest secures advances made or contracted for— failure to renew the registration of a financing statement ; the discharge of the registration without authorisation; or an error, after the registration of the security interest ceases to be effective or is discharged; or before the registration of the financing statement .

Section Priority of negotiable document of title Section A perfected security interest in a negotiable document of title has priority over a security interest in the goods perfected by another method after the issue of the negotiable document of title .

Section Priority of lien Section A lien over goods with respect to which a person furnishes materials or services in the ordinary course of business has priority over a perfected security interest in the same goods unless the lien is given by an instrument which provides that the lien does not have priority.

Section Priority of security interests in fixtures Section A secured party who has a right to remove goods from any land or building shall exercise the right in a manner that— Goods such as partition walls of commercial office premises, to which a security interest has attached, remain goods for the purposes of this Act even if they are subsequently fixed to any land or building, and they may be removed by a secured party who becomes entitled to possession of them under a security agreement. A secured party who has a right to remove any goods fixed to any land or building shall not remove them without first giving to the owner or a person for the time being in possession of the land or building, notice of not less than ten working days, of the intention to remove the goods . does not cause greater damage or injury to the land or building or other property situated on the land, than is necessarily incidental to the removal of the goods ; and does not put the occupier of the land or building to greater inconvenience than is necessarily incidental to the removal of the goods .

Section Priority of security interests in crops Section A perfected security interest in crops for new value given to enable a debtor produce the crops during the production season, given not more than three months before the crops become growing crops takes priority over an earlier perfected security interest . Subsection (1) shall apply where the earlier perfected security interest secures obligations due more than six months before the crops become growing crops , even though the person giving new value had knowledge of the earlier security interest . Notwithstanding the provisions of this Act, a security interest in crops is a secured interest in the crops not only while the crops are growing, but afterwards when cut or separated from the soil, and whether stacked or stored on the land where the crops were grown or on any other land or premises. A security interest in crops does not prejudicially affect the rights of a lessor or mortgagee of any land on which the crops are growing, except where the lessor or mortgagee consents in writing to the creation of that security interest . A perfected security interest in crops is not extinguished or prejudicially affected by a subseque...

Section Priority of security interests in accessions Section A security interest that attaches to goods after they become an accession is postponed in priority to the interests of a person with an interest in the other goods at the time the security interest attaches to the accession, who has not— A security interest in an accession does not take priority over— a person with an earlier perfected security interest in the goods who, without knowledge of the security interest and before its perfection— A secured party who has a right to remove an accession from the whole, shall exercise the right in a manner that— Except as provided in this section, and subject to section 33 , a security interest in an accession has priority, as to the accession, over a claim of a person to the goods to which the accession attaches, for the purposes of other goods. consented to the security interest in writing; or disclaimed an interest in the accession in writing. a subsequent purchaser for value of an interest in the goods ; an assignee for value of the interest of a person with an interest in the security interest at the time the goods become an accession; or makes an advance under the agreement cr...

Section Priority where goods are processed or mixed Section A perfected security interest in goods that subsequently become part of a product or bulk, continues in the product or bulk where— the goods are so manufactured, processed, assembled or mixed that their identity is lost in the product or bulk; or a financing statement covering the original goods also covers the product into which the goods are manufactured, processed or assembled. In a case to which subsection (1) (b) applies, separate security interest in part of the original goods which are manufactured, processed or assembled into the product shall not be claimed under section 32 . Where more than one perfected security interest continue in the product under subsection (1), the security interests rank equally according to the ratio that the cost of the goods to which each interest originally attached bears to the cost of the final product.

Section Priority subject to postponement Section A secured party may postpone the priority of his or her security interest to another interest. A postponement of priority is effective between the parties according to its terms and may be enforced by a third party, if the third party is the person or one of the people for whose benefit the postponement is intended.

Section Designation of registrar Section The Registrar General appointed under the Uganda Registration Services Bureau Act, Cap. 210 shall be the registrar of chattels securities under this Act.

Section Registrar’s official seal Section The registrar shall have an official seal, the form, use and custody of which shall be prescribed by regulations.

Section Register of chattels securities Section The registrar shall establish and maintain a register of security interests in personal property to be known as the register of chattels securities. The register shall clearly specify the nature of the security interest registered and details of the chatties over which the interest is created.

Section Register book and index to be kept Section The registrar shall— The registrar shall within three days after registration, transmit an instrument to the respective area, where— cause every instrument registered in the register book to be numbered; mark on every registered instrument , the date and number of registration. The register may be maintained as an electronic records system. The registrar shall keep an index of the names of grantors and grantees of instruments. the instrument describes the residence of a grantor to be in a place outside the area in which the registry is situated; or the instrument describes a part of the chattels as being in a place outside the area. A person may search, inspect, make extracts from and obtain copies of the abstract registered, upon payment of a prescribed fee.

Section Mode of registration Section Registration of an instrument shall be effected upon payment of the prescribed fee and submission to the Registrar, of— the instrument , schedules, annexes and references to the instrument ; and a statutory declaration.

Section Time for registration Section The registration of a financing statement registered more than twenty one working days after the agreement to create the security interest is entered into, does not perfect the security interest , if— An instrument may be registered within twenty-one days from the day on which it is executed and the time of registration shall be recorded in the register . Where there are more than one grantors, the date of execution of an instrument shall be deemed to be the date of the execution by the grantor who last executes the instrument . A financing statement may be registered before or after an agreement to create a security interest is made, or at the time when a security interest attaches. within twelve months of the date of registration, a trustee in bankruptcy is appointed; or a winding up order is made, in respect of the debtor . Where the time for registering an instrument expires on a day on which the office of the registrar is closed, the registration shall be valid if made on the next following day on which the office is open. The day on which an instrument is executed shall not be included in the period within which the instrument may be regi...

Section Duration and renewal or change of registration Section Registration is effective for the period of time indicated in the instrument or financing statement . Registration may be renewed by registering a financing change statement at any time before the original registration ceases to be effective, upon payment of the prescribed fee. The renewed registration is effective from the time at which the duly completed financing change statement is delivered for registration.

Section Register searches Section A person may, upon payment of a prescribed fee, request for— a search of the register against the name of a debtor ; a search of the register according to the serial number of goods of a kind that is required or permitted to be described by serial number in a financing statement ; a search according to a registration number; or a copy of any registered financing statement or other registered document. A certified copy of an instrument or a financing statement is admissible in evidence as a true copy of the original.

Section Certified copies Section A person may have a certified copy of a registered instrument or financing statement upon payment of the prescribed fee.

Section Fees Section A person who desires to register an instrument , a financing statement or document, or requests for a search of the register , shall pay the prescribed fee.

Section Covenants implied in instruments Section The covenants specified in the Second Schedule shall be implied in every instrument , and shall have the same effect as if they were expressly written in the instrument .

Section Covenants to be several or joint Section The obligations and benefits arising out of covenants in an instrument may be enforced severally or jointly.

Section Covenants to bind executors and administrators Section Covenants, expressed or implied in an instrument , shall bind the executors, administrators and assignees of the person upon whom the covenants impose an obligation, and shall operate for the benefit of the executors, administrators and assignees of the person, or the successors and assignees of the company or corporation, for whose benefit they endure.

Section Covenants may be varied Section Any of the covenants specified in the Second Schedule may be expressly varied by the parties to the instrument .

Section Attestation of instrument Section An instrument shall be attested by at least one witness, who shall add his or her signature, address and occupation, to the instrument .

Section Instrument not duly attested and registered to be void Section An instrument which is not duly attested or registered shall be void, except as against the grantor, in respect of the chattels comprised in the instrument .