Personal Property Securities Bill

Oct. 3, 2017, 5:59 a.m.

Public consultations have been held on the new Personal Property Securities Bill 2017, which aims to increase credit improvement by mortgaging personal, moveable property, and ultimately expanding the collateralization of fixed assets such as land and buildings.

This is particularly directed at micro-small and medium enterprises (MSME) through the establishment of an online registry, a concept backed by the Reserve Bank of Fiji.

In its recent submission to Parliament’s Standing Committee on Justice, Law & Human Rights, the RBF’s acting Governor General, Ariff Ali cited the Bill as an important development for its financial system and the cornerstone of its Secured Transactions Reform, to address a current, financing gap and unlock access to finance for private sector growth.

“This Bill, in simple terms, allows those without land holdings to obtain credit,” he highlighted, adding that if such credit goes for productive purpose, it would be more inclusive of economic growth.

“Firstly, the Bill provides for filing of notices for priority lending and provided clear rules surrounding listing and enforcement. Secondly, it establishes an online collateral registry that lists out security interests over personal properties and flags that a secured party is claiming a security interest against the personal property of a debtor.

“Thirdly, the Bill expands the collateralisation base from just fixed assets of land and building to what is termed as moveable assets. Moveable assets include vehicles, industrial / agricultural machinery and equipment, commodities, agricultural products (crops, livestock, fisheries, etc), minerals and timber, inventory, intellectual property rights, negotiable instruments, accounts receivables and bank accounts and insurance policies.”

Ali noted that given a lack of acceptable collateral (usually land and buildings), firms and individuals who couldn’t access loans in the past now had better chances to finances by pledging personal property as security for their loans.

“This stands to benefit our micro, small and medium enterprises sector, which accounts for almost 97 per cent of all business but most of who do not have land or buildings but have other forms of collateral. Access to credit for the MSME sector has always been a challenge and this legislation will greatly assist in over-coming that.”

He said the second benefit envisages was that the cost of credit would likely fall and new financial products and services would likely be introduced.

“Thirdly, there will be efficiency gains. For example, previously a lender would need to complete a Bill of Sale and physically register this at the Titles Office. Now, this will be registered on the Online Registry without delay within a matter of minutes.

“ In addition, the Registry is a publicly searchable registry with no cost. When buying goods, searching the register helps buyers make informed decisions because a quick check on the Registry will ascertain whether the same valuable goods are free from any prior claims. Under the existing legal and financial sector framework, this process is quite cumbersome and costly.  For example, A person intending to buy a car (from his neighbour) has to either hire a lawyer or personally search for pre-existing security interest in the form of a Bill of Sale or a Mortgage. The legislation and registry would allow the buyer to simply go to the registry’s website and search the vehicle’s registration number in order to determine if the vehicle is free from security.”

Ali noted that when issuing credit, properly registering a security interest could protect a lenders interest if the debtor defaulted on repayments.

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