Security Interest in Movable Property Act, 2019

The Act comes into force on a date appointed by the Minister by statutory instrument.

This section provides definitions of terms used in the Act (interpretation).

This section states the scope of application: the Act applies to security rights and security interests in movable property and lists specific inclusions and exclusions.

A security interest in a tangible asset does not extend to the asset's intellectual property, and a security interest in the intellectual property of a tangible asset does not extend to the tangible asset.

A security interest in a negotiable document extends to the tangible asset covered by the document if the issuer is in possession of the asset when the security interest is created.

An agreement for a security interest becomes enforceable only when certain formal requirements are met (for example, the grantor must sign and must have rights or power to encumber the collateral).

An agreement creating a security interest is effective according to its terms between the parties and is enforceable against third parties; a duty of good faith applies to both the grantor and the secured creditor.

Where collateral is held by the secured creditor, the secured creditor must take reasonable care to preserve it; reasonable expenses (including insurance) are chargeable to the grantor and secured by the collateral; the grantor bears uninsured loss risk; the secured creditor may hold increases or profits as additional security but must remit or apply them to the obligation; and the secured creditor may use or operate the collateral to preserve it subject to limits.

Certain persons may request a secured creditor to update them about collateral status or unpaid debt; the secured creditor must respond within ten working days; aggrieved persons may apply to court which can order compliance or treat the security interest as unperfected or extinguished if orders are ignored.

A security interest continues in collateral despite its sale, lease, license, exchange or other disposition unless the Act or an agreement between the grantor and the secured creditor provides otherwise.

A security interest created in a tangible asset that becomes a commingled good continues in the commingled good, but is limited to the value of the collateral immediately before it became part of the commingled good.

A security interest created under Part II is perfected when (a) a notice is entered in the register, (b) the secured creditor or their agent has possession of the collateral, or (c) for a deposit account the secured creditor or their agent has control of the deposit account; perfection can occur automatically in specified circumstances, and the method of perfection may be changed at any time provided there is no interruption in perfection.

If proceeds are not money, accounts receivable, negotiable instruments or a right to payment to a bank account, the secured creditor must perfect the security interest in those proceeds using methods in section 12(1) or regulations.

If a security interest that was perfected by registering a notice under section 12(1)(a) is transferred, the transferor must register an amendment to that notice.

When movable property with a security interest perfected under the law of another state is relocated or transferred to Uganda, this Act applies to the property and the security interest remains perfected; a person who perfected such an interest abroad may also perfect it in Uganda.

Collateral perfected in Uganda remains perfected if moved outside Uganda; the secured creditor may also perfect another security interest by the methods in section 12 or regulations.

The Registrar General appointed under the Uganda Registration Services Bureau Act, Cap. 210 shall be the registrar of security interests in movable property under this Act; the functions bestowed on the bureau under this Act shall be performed by the Registrar.

The bureau must establish and maintain an electronic register of security interests in movable property called the "register of Security Interest in Movable Property".

Initial and amendment notices for security interests in movable property must be registered electronically in the register and are effective from the date and time entered; registration requires payment of prescribed fees and written authorisation by the grantor, but may be made before creation of the security interest if authorised in writing.

A single notice may be registered for two or more security interests created by the same grantor under two or more security interest agreements with the same secured creditor.

A notice of a lien may be registered by the lien holder without the subject's consent; a judgment creditor may register a lien on a judgment debtor's property after obtaining a court order; and for an insolvent company a notice of lien may be registered by the court or by a liquidator appointed by the court.

An initial notice must include: the unique identification number and address of the grantor; the unique identification number and address of the secured creditor or their representative; a description of the collateral; the date and period of perfection of the registration; and any other information prescribed by the Minister by regulations.

An initial notice is effective for the period the secured creditor states in the notice; that period may be extended by an amendment notice registered within six months before expiry; if an initial notice lapses without amendment the perfected security interest is discharged; the secured creditor may still perfect the security interest by other methods if the grantor has not fulfilled its obligations.

The secured creditor or grantor may register a cancellation notice for an initial or amendment notice in specified circumstances; the Registrar may cancel notices for listed reasons; the bureau must give notice before cancelling; a discharge notice must be filed when the grantor has met obligations; an aggrieved person may appeal to the High Court.

People who believe a registered notice is inaccurate or wrongfully registered may register a notice of objection; if the secured creditor then fails to respond in part or wholly, the person who registered the objection must apply to the registrar for cancellation of the initial notice.

A secured creditor must, within five working days after the secured obligation is paid or performed in full, discharge the security interest and file a discharge notice; if the creditor does not file a discharge notice in that time, the grantor may apply to the registrar to discharge the initial or amendment notice.

On request, the registrar must issue a certified report of the results of a search of the register, for a fee as may be prescribed.

The registrar must remove a notice from the register when it expires; must not remove or amend information in the register except as provided by the Act; and must archive removed notices for ten years.

The registrar and officers acting under the authority of the registrar are not liable for actions or omissions done pursuant to this Act.

A perfected security interest has priority over an unperfected security interest.

A security interest created by a grantor is subordinate to an earlier-created security interest over the same collateral.

The order of priority of a security interest is not affected by a change in the method of perfecting the security interest, where the security interest is not at any time unperfected.

A perfected security interest has priority over all obligations it secures, including obligations incurred after perfection, and covers collateral listed in the register whether acquired before or after registration.

The priority of a security interest in collateral also applies to proceeds arising from dealing in that collateral.

If a tangible asset becomes part of a product or mass, competing security interests in the product or mass keep the same priority order they had in the tangible asset immediately before it became part of the product or mass; if multiple security interests were perfected in the tangible asset before commingling, they rank in proportion to the value at the time of commingling; a security interest perfected before goods become commingled has priority over one perfected when they become commingled; where multiple security interests in commingled goods were perfected before commingling, they rank equally in proportion to the value at the time they became commingled goods.

A security interest perfected before an asset becomes an accession has priority over a claim to the tangible asset to which the accession is attached.

A security interest in a tangible asset that becomes a fixture continues in that asset after it is affixed, and a perfected security interest in such a fixture has priority over competing interests in immovable property under the Land Act, Cap. 227 and the Mortgage Act, 2009.

Certain perfected security interests in growing crops (and some crop-related security interests given for value) have priority over landowners, mortgagees, and some unperfected interests; a judgment creditor who seizes land for crops may take priority over unperfected crop security interests.

Purchasers, transferees, lessees, and licensees of collateral subject to a perfected security interest acquire rights in that collateral, with specific exceptions and rules about unperfected security interests and sales or leases in the ordinary course of business.

A person who takes possession or control of collateral without knowledge of an unperfected security interest takes the collateral free of that unperfected security interest.

Acquisition security interests have priority over competing non-acquisition security interests created by the grantor.

A purchaser of a negotiable instrument has priority over a secured creditor's security interest if the purchaser gives value, takes possession in the ordinary course of business and lacks knowledge that the sale violates the secured creditor's rights; separately, a security interest perfected by possession has priority over one perfected by registration.

A debtor, grantor or any other person owing a secured-payment or performance shall not unilaterally waive their rights under this Part before default.

When a grantor defaults on a secured obligation the secured creditor must serve a written (or agreed) notification specifying the nature and extent of the default, required remedy and time for remedy; if not remedied the creditor may proceed to enforce the security interest including registering an enforcement notice for registered security interests or taking other actions permitted under this Act.

A secured creditor who has priority over the enforcing creditor may take over enforcement at any time before the collateral is sold, when enforcement was begun by a different secured creditor.

Allows secured creditors and financial institutions, upon default, to instruct payment from account debtors or apply deposit balances to secured obligations without a court order, and permits certain actions with documents of title and control agreements.

A secured creditor may take possession of collateral without a court order in specified circumstances and is entitled to take possession after default; special rules apply to fixtures and small-value transactions.

If a debtor is in default, a secured creditor may sell any or all of the collateral (subject to section 46 and commercially reasonable preparation).

A secured creditor must give and file a disposal notice at least ten working days before disposing of collateral; persons may object within five days; registrar must suspend disposition on objection until withdrawn or lapsed; objections lapse after forty five days unless court proceedings and injunction are served.

A secured creditor must give at least ten working days' notice of a proposed distribution to the persons in section 49(1) specifying the earliest distribution date, when claims may be presented, the address for claims, and required proof; the persons in section 49(1) must within five working days of receipt provide the secured creditor with an authenticated claim or a notice of claim of interest in the collateral.

A secured creditor who disposes of collateral must apply the proceeds in a specific order to cover expenses and secured claims; after deductions, the creditor or lien holder may pay any surplus to court, and the secured creditor must account to the grantor or owner for any surplus.

A secured creditor must provide a written statement of account within ten working days after disposing of collateral, and the statement must show gross proceeds, enforcement and disposition costs and expenses, and the balance owing between creditor and debtor.

When collateral is sold to a purchaser for value, the sale is effective even if the secured creditor failed to comply, provided the purchaser transfers the debtor's rights in the collateral, discharges the security interest and any subordinate security interest or lien, has no knowledge of defects, does not buy in collusion, and acts in good faith.

The grantor, a person with a right in the collateral, or the debtor may terminate enforcement and redeem the collateral by performing the secured obligations or paying expenses; a grantor has priority to redeem.

A buyer or transferee who acquires collateral sold or disposed of under this Part takes the grantor's rights free of the enforcing secured creditor and competing claimants; a lessee or licensee of collateral is entitled to the benefit of the lease or license during its term.

If a secured creditor fails to follow this Part, the grantor, a person with a right in the collateral, or the debtor may apply to court to obtain relief and recover damages from the secured creditor.

The Registrar General may impose administrative penalties on persons who do not comply with the Act.

Persons who file notices fraudulently, make false statements to deceive officials, or fail to inform the Registrar General after making false statements commit offences punishable by up to two years' imprisonment or a fine not exceeding two hundred currency points, or both.

The Minister may, by statutory instrument, make regulations to give effect to the Act and may make regulations providing for registration procedures, notice formats, search requirements, fees, administrative penalties, and anything required to be prescribed under the Act.

Prior security interests that were perfected under earlier law remain perfected under this Act until the time they would have ceased under prior law or until 150 calendar days after the Act's effective date; if a secured creditor satisfies this Act's perfection requirements before that time, the perfection is deemed continuous; otherwise it becomes unperfected after that period.