Perfection of Security Interests


  1. Registration: For shares that are listed on the Nairobi Securities Exchange and have been dematerialised, security over those shares should be registered in accordance with the provisions of the Central Depositories Act 2000 by the delivery to the chargee of a prescribed form. The latter requirement is in addition to the process of registering a charge at the Companies Registry. The chargee is required to send the form to the Central Depository and Settlement Corporation via a central depository agent. The Central Depository and Settlement Corporation will record the security interest and freeze the shares in the chargor’s account. This additional process is not required for a floating charge over listed shares.Alternatively, the Registry may issue a letter confirming that the charge is not registrable. In such a case, the company secretary of the chargor should undertake not to allow the chargor to deal with the shares and note the charge in the chargor company’s register of members.
  2. Deposit of share certificates: The terms of the deposit, enforcement rights and rights to return of the shares upon satisfaction of the underlying debt should be set out in a memorandum of deposit, accompanying the share certificate. The chargor must deliver the share certificates (and accompanying memorandum of deposit) and a signed but undated share transfer form to the chargee.
  3. Power of attorney: The chargor must grant and deliver an irrevocable power of attorney to the chargee.

2. Bank Accounts

In the case of a fixed charge, the secured party must take control over the charged accounts and prevent the chargor from withdrawing monies from, or otherwise dealing with, the charged accounts without the chargee’s consent.

With a floating charge, the chargor is permitted to retain control of the charged accounts unless and until the charge converts into a fixed charge following a specified event occurring as set out in the account charge documents.

3. Land

  • Charge: The charging instrument must be in a prescribed form. Third-party consent may be required prior to creation of the charge in certain cases, e.g., charges over leasehold property, land leased from the Kenya Railways Authority or the Kenya Ports Authority, or agricultural land.A charge over land must be registered at the applicable Lands Registry. There is no applicable time limit, although charges are only effective upon registration, and the date of registration determines the priority between charges. Registration will be carried out once the Registry receives three original copies of the charging instrument, the completed prescribed form, and a nominal fee per document and per title.If the chargor is a company registered in Kenya, the charge over land must also be registered at the Companies Registry.
  • Deposit of title deeds: The grantor of the security interest is required to deposit the title deeds with the secured party.

4. Contractual Rights and Insurance Proceeds

Notice of the security interest must be given to the counterparty of the underlying contract. For an assignment of insurance proceeds, this means giving notice to the relevant insurer.

The failure to give notice to a counterparty does not invalidate the security assignment; it may however, affect the priority of the security interest.

5. Authorisations and Licenses

Provided any necessary consent from the issuing authority has been obtained, the assignment can be perfected in the same manner described above. Importantly, even if the issuing authority’s consent is not required to create security over the authorisation or license, consent may still be required to effect a transfer of the authorisation or license upon an enforcement.

6. Intellectual Property

As with other contractual rights, the licensor must be notified of any assignment of rights under an intellectual property license agreement.

Personal Property and Tangible Assets

  • Charge: The charge must be registered at the Registrar of Chattels within 21 days of the charge’s creation via the delivery of the original charging instrument attached to an Affidavit of Due Execution in a prescribed form, and a schedule of the property charged and a nominal fee paid. This registration must be renewed every five years.
  • Pledge: The pledgor must deliver possession of the personal property to the pledgee.
  • Mortgage: The process of perfecting a mortgage over personal property is the same as that outlined in above.
  • Ships and aircraft: For aircraft, a security interest is noted on the certificate of registration, which is issued by the Kenya Civil Aviation Authority and registered at the International Registry of Mobile Assets (and the Companies Registry, if the chargor is a company registered in Kenya). For ships, registering the security interest at the Kenya Maritime Authority is recommended.

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