Proposed Reforms to Malawi’s Secured Transactions Law
Definition of Secured Transaction
The proposed Secured Transactions Law (STL) will define a secured transaction as any agreement that secures performance of an obligation with movable property.
Key Features
- Comprehensive Registration System: The STL will introduce a comprehensive registration system for all types of collateral, including tangible, intangible, and perishable property.
- Priority Determination: Priorities among conflicting claims will be determined by the chronological order of registrations.
Enforcement
The STL will deal with enforcing rights against movable property based on modern concepts of efficient enforcement.
Key Features
- Efficient Enforcement: The STL will ensure that enforcement is efficient and effective.
Functional Approach
The proposed STL will not repeal existing laws such as the Hire-Purchase Act, 1964, but subject them to the registration and priority rules of the future STL.
Key Features
- Existing Laws Subjected to New Rules: Existing laws will be subjected to the new registration and priority rules.
- Continuation of Stop Orders: Financial institutions may continue to use stop orders under the Farmers’ Stop-Order Act, but the form of the contract between lender and borrower will not dictate how third parties are affected by it.
Examples
The report provides examples of how the proposed reforms would affect specific types of agreements, including conditional sale agreements and financial leases.
Key Features
- Application to Specific Agreements: The proposed STL will apply to any transaction that secures performance of an obligation with movable property, regardless of the type of agreement used.
- Effect on Third Parties: The effect on third parties will be determined by the rules within the STL.
Publication
The report recommends that the proposed STL provide for three ways to effect publication: (1) publication of a notice relating to the security interest in a computerized registry, (2) delivery of possession of negotiable documents of title, and (3) examination of warehouse receipts and land usage rights for inclusion within the publication rules.