OPERATIONALIZATION OF MOVABLE COLLATERAL. REGISTRY DIRECTIVE
NO. MCR/01/2020
WHEREAS, modern secured
transactions system enables individuals and entities to use their movable
assets as security for credit generating new productive capital, expands
investments, creates more job opportunity, increases production and productivity,
creates opportunity to expand and foster access to and usage of financial
products and services;
WHEREAS, establishing single
comprehensive electronic registration regime for secured transactions in
movable property to determine priority rights among competing claimants is necessary;
WHEREAS, it is necessary to enable
the creation of security rights in current and future movable property, ensure
their publicity and effectiveness through efficient enforcement mechanisms;
NOW, THEREFORE, in accordance with
Article 94(2) and 95 of Movable Property Security Right Proclamation No.
1147/2019. the National Bank of Ethiopia issued this directive.
1. Short Title
This Directive may be cited as “OPERATIONALIZATION
OF MOVABLE COLLATERAL REGISTRY, DIRECTIVE NO. MCR/001/2020”.
2. Definitions
For the purpose of this Directive, unless
otherwise provided,
2.1. “amendment notice” means a change,
correction, addition, deletion of information in the registered notice by the
secured creditor;
2.2. “collateral registry” means an electronic
system for receiving, storing and making accessible to the public information
about security rights and nonconsensual rights in movable property;
2.3. “grantor” means a person that creates a
security right to secure either its own obligation or that of another person; a
buyer or other transferee, lessee, or licensee of the collateral that acquires
its rights subject to a security right;
2.4. “initial notice” means the first registered
notice in the Collateral Registry by the secured creditor or its authorized
representative;
2.5. “Movable Collateral Registry Office” means an
office established to manage the Collateral Registry;
2.6. “moveable property” means any incorporeal or
corporeal asset as defined in
Article 2(27 ) of the Proclamation irrespective of
the manner in which it is used;
2.7. “National Bank” means the National Bank of
Ethiopia;
2.8. “non-consensual creditor” means a creditor
that has obtained a right in the
collateral, on the basis of a court order or
applicable laws;
2.9. “Proclamation” means Movable Property
Security Right Proclamation No.
1147/2019;
2.10. “prior security right” means a right covered
by a security agreement entered into before the entry into force of
Proclamation No. 1147/2019;
2.11. “registrar” means a person appointed to
supervise and administer the operations of the Collateral Registry;
2.12. “search certificate” means an official document
provided by the Collateral Registry to a searcher against a search criterion
entered;
2.13. “secured transaction” means an arrangement
between the grantor and the secured creditor which creates a security right in
the grantor’s moveable property;
2.14. “secured creditor” means a person that has a
security right or non-consensual creditor;
2.15. “statistical information” means any information
collected by the Collateral Registry for internal purposes;
2.16. “user account” means a designated person or
institution registry account that has met the terms and conditions of use of
the Collateral Registry for the purposes of transacting on the Collateral
Registry. The user account will store a username, password, and other
administrative information;
2.17. “person” means natural or legal person;
2.18. Expressions in the masculine gender includes
the feminine;
2.19 The definitions assigned to the terms under
Article 2 of the Proclamation shall be applicable to this Directive;
3. Scope
This Directive shall apply to rights in movable
property created by agreement that secure payment of credit or other
performance of an obligation.
4. Establishment of
Movable Collateral Registry Office
4.1 To execute the power, duties and
responsibilities vested in it as per Article 95 of the Proclamation, Moveable
Collateral Registry Office is established and housed in the National Bank.
4.2. A Director who is appointed by the National
Bank to supervise and administer the operations of the Collateral Registry
shall be the registrar.
5. Access to the
Collateral Registry
Any secured creditor or an authorized
representative shall have a User Account approved by the Movable Collateral
Registry Office to access the Collateral Registry upon fulfilling the requirements
stipulated under Articles 7, 8 and 9 of this Directive and other relevant
provisions of the Proclamation.
6. Form of Communication
Any communication from the Collateral Registry
including
6.1. notifications of refusing access under Article
24(4) of the Proclamation;
6.2. notifications of rejecting registration of a
notice or a search request under Article 25(3) of the Proclamation;
6.3. providing a copy of the information in a
registered notice under Article 33( 1 ); and
6.4. providing search results under Article 38(1 )
of the Proclamation shall be electronic and automated.
7. Duties and
Responsibilities of Banks, Microfinance Institutions and Capital Goods Finance
Companies
Banks, Microfinance Institutions and Capital Goods
Finance Companies shall
7.1. formulate and put in use clear policies and
procedures and other relevant documentations for secured transactions;
7.2. assign an Administrator at a senior
managerial level preferably a person heading the Credit Department or
Directorate at the head office, who
7.2.1. oversees access to and use of the
Collateral Registry with in his own institutions;
7.2.2. acts as link between the Movable Collateral
Registry Office and his/her institution, including branches and sub-branches
/on matters relating to Collateral Registry;
7.2.3. manages roles within the institution as per
the Collateral Registry system access rights granted to the institution and
other requirements of the functionalities of the Collateral Registry; and
7.2.4. ensures proper utilization of the Collateral
Registry at the head office, branches and sub-branches in strict compliance
with this Directive and the institution’s own internal policies and procedures.
7.3. communicate in writing to the National Bank
the name and designation, contact address, telephone number(s) and e-mail
address of the Administrator;
7.4. communicate in writing any subsequent change
or replacement of the Administrator without delay.
7.5. assign a Senior Officer at managerial level preferably
a person heading the Information and Communication Technology unit of the
institution, as a security administrator, who shall be responsible for:
7.5.1. maintaining the list of users with access
to the Collateral Registry within the institution, including updating the list
whenever there is a change due to any addition or removal of users; and
7.5.2. assigning the appropriate security access
level for the authorized users in the institution when authorized by the
Administrator in writing.
7.6. ensure the integrity and security of the data
and shall make sure that access to and use of the Collateral Registry at the institution
is provided and allowed in accordance with strict data access procedures.
7.7. be fully responsible for any damages, claims
or liabilities that may arise as a result of registering inaccurate, misleading
or incomplete information in the Collateral Registry;
8. User Account
To get a user account:
8.1. A secured creditor or its authorized
representative shall accept the terms and conditions, adopted by the Moveable
Collateral Registry Office, specified in the electronic registry system, for
the use of the Collateral Registry;
8.2 A secured creditor shall apply and fill all
the required information in the electronic application form available on the
Collateral Registry’s website, identifying itself by name, address and any
other information that the Collateral Registry may request.
8.3. The Movable Collateral Registry Office shall
review the application within two (2) business days and approves a User Account
for the applicant if all the requirements are fulfilled.
8.4. The user account holder shall safeguard the password
approved by the Movable Collateral Registry Office and used by individual users
authorized by the holder.
8.5. The Movable Collateral Registry Office shall
allow a holder of the user account to create sub-accounts to authorize multiple
individuals to submit notices.
8.6. The holder of the user account shall be
responsible for all transactions done through the user account.
9. Fees
The secured creditor or an authorized representative
and a searcher shall pay fees pursuant to Article 24( 1 ) of the Proclamation.
9.1. Banks and Capital Goods Finance Companies
shall pay:
9.1.1. Birr 100 for registration of an initial
notice; and
9.1.2. Birr 50 for extending the period of effectiveness
of initial notice.
9.2. Microfinance Institutions shall pay:
9.2.1. Birr 50 for registration of an initial
notice;
9.2.2. Birr 30 for extending the period of
effectiveness of initial notice.
9.3. All other persons, such as non-consensual
creditors and suppliers, shall pay:
9.3.1. Birr 200 for registration of an initial
notice;
9.3.2. Birr 100 for extending the period of
effectiveness of initial notice.
9.4. Any person who wants to get a signed
certificate for a search shall pay Birr 30.
9.5. The following services of the Collateral
Registry shall be available free of charge:
9.5.1. Registration of
9.5.1.1. an initial notice relating to a prior
security right pursuant to Article 92 of the Proclamation;
9.5.1.2. an amendment notice related to update on
registration notice; and
9.5.1.3. a cancellation notice;
9.5.2. Searches without printed certificate.
9.6. Modes of Payment
9.6.1. Postpaid Fees
9.6.1.1. Fees as stipulated in this Article shall
be collected directly by the registry system from the user account holder
account and a notice of payment shall be automatically sent to the
administrator of the user account to notify payment of fees for the services
used;
9.6.1.2. Financial Institutions with user account
at the registry shall
a) collect fees, as stipulated in this Article, on
behalf of the Movable Collateral Registry Office from any person who seek the
services of the Collateral Registry;
b) upon receiving the fees, generate a unique code
from the collateral registry and provide it to the user to enable the later to
link to the system; and
c) credit the collected fees to an account of the
Movable Collateral Registry Office.
9.6.2. Prepaid Fees
A user account holder may make a prepayment of fee
to the Movable Collateral Registry Office’s account in advance of using the
services of the Collateral Registry. As the service rendered by the Collateral
Registry, the prepaid amount shall be reduced automatically by the specified
fees and reported in the transaction history of the user’s account record.
9.6.3. The Movable Collateral Registry Office may
introduce any other payment methods including online or electronic payments and
shall inform the same to users.
10. Language of
Information in a Notice
Any information in a notice must be expressed in
English or Amharic
11. Grantor Identifier
Pursuant to Article 28 of the Proclamation, the
grantor identifier
11.1. for natural persons or representatives who
are citizens of Ethiopia, is
11.1.1. the taxpayer identification number issued
by relevant authority; and
11.1.2. the name as it appears on the taxpayer
identification document issued by relevant authority
11.2. for natural persons or representatives who
are not citizens of Ethiopia, is
11.2.1. the Passport Number: and
11.2.2. the name as it appears in the valid
passport.
11.3. for legal persons or representatives that
are constituted under the relevant Ethiopian laws, is
11.3.1. the taxpayer identification number, issued
by relevant authority; and
11.3.2. The name that appears on the taxpayer
registration document issued by relevant authority.
12. Secured Creditor
Identifier
Pursuant to Article 29 of the Proclamation, the
secured creditor identifier,
12.1 . for natural persons or representatives who
are citizens of Ethiopia, is
12.1.1. the taxpayer identification number issued
by relevant authority; and
12.1.2. the name as it appears on the taxpayer
identification document issued by relevant authority
12.2.1. the taxpayer identification number, issued
by relevant authority; and
12.2. for legal persons or representatives that
are constituted under the relevant Ethiopian laws is:
12.2.1. the taxpayer identification number, issued
by relevant authority; and
12.2.2. The name as it appears on the taxpayer registration
document issued by relevant authority
13. Address of the Grantor
and Secured Creditor
Pursuant to Article 27( 1 )(c) of the
Proclamation,
13.1. the residential address must be provided for
a natural person; and
13.2. the address of the principal or registered
office must be provided for a legal person.
13.3. An email address may be provided in
additional to the address as prescribed in this Article
14. Description of
Collateral
14.1 . A description of collateral shall
reasonably identify the collateral, including by a type of collateral, category,
quantity or specific listing;
14.2. For the purpose of Article 2(46) of the
Proclamation, in addition to motor vehicle, trailer, agricultural machinery,
construction machinery, and industrial machinery, serial-numbered collateral
includes equipment and machinery held for business use
15. Statistical
Information
15.1. In accordance with Article 27(1)(f) of the
Proclamation, an initial notice and an amendment notice that adds a grantor
shall include statistical information for each grantor.
15.2. The secured creditor or an authorized
representative shall enter the statistical information on the size/type of the
business, whether it is a micro, small or medium enterprise, including women’s
owned enterprises.
15.3 An initial notice with respect to a prior security
right shall be registered whether or not it provides any statistical
information.
16. Notice with Respect to
a Right of a Non-Consensual Creditor and Other Persons
16.1. A notice with respect to a right of a
non-consensual creditor or other persons shall provide the same required
information as applicable to an initial notice relating to a security right.
16.2. A notice submitted shall not be rejected if
it does not provide statistical information.
17. Transfer of a Security
Right
An amendment notice relating to a transfer of a
security right pursuant to Article 16 of the
Proclamation shall identify the transferee and the
collateral that relates to that security right.
18. Services
18.1.Services of the Collateral Registry shall be
available twenty-four hours a day, every day of the week.
18.2. The Registrar may suspend access to the
Collateral Registry, in whole or in part, for maintenance or when circumstances
arise that makes it impossible or impracticable to provide services but with
prior notification to users.
19. Requirement for the
Provision of Credit Against Movable Collateral
19.1. All banks shall allocate at least five per
cent (5%) of their credit disbursements of the year to individuals, persons in
the agricultural sector including cooperatives, unions and others and Micro,
Small and Medium Enterprises against Movable Property as collateral, which
shall commence on July 1, 2020;
19.2 Notwithstanding sub-article 19.1 of this
Article, banks may partner with microfinance institutions to allocate the fund
on a whole sale basis and in their own terms and conditions to be provided as
credit against movable property as collateral by the later;
19.3 Microfinance institutions that generate funds
in accordance with sub-article 19.2 of this Article shall exclusively allocate
the fund for the purpose stipulated under sub-article 19.1 of this Article;
19.4. A bank that failed to achieve the target in
the preceding budget year shall double the allocation in the subsequent budget
year;
19.5. If a bank still fails to comply with
sub-article 19.4 of this article, the National Bank shall take appropriate
actions in allocating the fund to the stated purpose;
and
19.6. All banks and microfinance institutions
shall provide quarterly information about the allocation of the fund as per the
format prescribed by the National Bank.
20. Penalty
Financial institutions that fail to comply with
any one of the provisions of this Directive shall pay penalty of Birr 10,000
for each violation.
21. Exemption from Payment
of Fees for Services
All users of the Collateral Registry are exempted
from payment of fees that are stipulated under Article 9 of this Directive for
Ninety (90) days from the coming into force of this Directive.
22. Entry into Force
This Directive shall enter into force as of the 26
day of February 2020.
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