A new bill seeking to overhaul security laws for movable property has faced criticism for its potential impact on businesses.
The Movable Property Security Rights (Amendment) Bill, 2024, proposes updating and unifying existing regulations while repealing the Hire Purchase Act.
Currently under review by the parliamentary committee on Finance, the bill seeks to introduce changes to the Movable Property Security Rights Act (MPSR), 2017.
The MPSR Act, introduced in 2017, was designed to simplify the use of movable assets as collateral.
However, it has faced criticism for conflicting with other regulations, including the Companies Act and the Hire Purchase Act.
The new bill aims to streamline these regulations to address such overlaps.
Sammy Ndolo, managing partner at Cliffe Dekker Hofmeyr, said, "If passed, this Bill could be a step forward in regulating movable property transactions and hire purchase businesses."
However, Ndolo voiced concerns about its potential complications.
The bill broadens the definition of hire purchase agreements to include transactions financed by sellers or third parties.
Ndolo noted, "Under the Bill, all entities involved in hire purchase must be licensed, which could streamline regulations but may also increase bureaucratic hurdles for businesses."
Another concern is the bill's provision for the Central Bank of Kenya (CBK) to set interest rates for hire purchase agreements.
"It is unclear whether the CBK will set specific rates or merely monitor them," which could affect the attractiveness of hire purchase deals,” explained Ndolo.
The bill also clarifies registration requirements for company charges and allows borrowers to cancel security registration notices if the security right is no longer valid.
"If approved, this Bill will mark a significant shift in how movable property transactions are regulated in Kenya, bringing both opportunities and challenges for businesses," he added.
