Short Title: 


Number of Bill: 

No. 12 of 2009

Date introduced: 

2 January 2009


 SUPPLEMENT No. 7                                                                                  24th July 2009                                                                                                                                                                                                                                                                                                                                            


 BILLS  supplement

to the Uganda Gazette No. 35 Volume 'Cll dated 24th July, 2009.


Printed by UPPC, Entebbe by Order of the Government.

Bill No.12      Chattels Securities Bill,        2009




  1. The object of this Bill is to regulate the making and enforcement of            security interests in chattels, to repeal the Chattels Transfer

Act Cap.70 and for other related purposes:

  1. Chattels security deals with the giving of personal property or chattels other than land as security for a loan or debt.
  2. Secured transactions generally deal with guaranteeing and giving security either for a debt, credit or property. The essenceof the security in relation to Chattels security is to secure the performance of an obligation, usually repayment of a debt arising from leased property. The overall 'purpose of the security is to improve the chances of getting repayment.


  1. Chattels as collateral for repayment of a debt are not well developed in Uganda. They are mostly used by individual lenders rather than banks. Banks usually accept onlyland as security. The current law has not therefore been put into much use.


  1. The law relating to chattels securities in Uganda is the Chattels Transfer Act, Cap. 70, common law and the doctrines of equity by virtue of the Judicature Act, Cap. 13. The Chattels Transfer Act has been on the Statute Book since 1978, and is largely based on the old English law and has rarely been put to use due to its archaic and complicated provisions. The common law principles and doctrines of equity derived from England are not easily accessible and some of them have been modified since the date of inception.


  1. Whereas there have been few amendments in the law over the years to keep up to date with changes taking place in society, there has never been a major attempt to reform the law on secured transactions, except for the Mortgage Act, Cap, 229 which amended the law relating to mortgages in 1974. The Chattels Transfer Act has never been amended.
  2. The Bill therefore is intended to overhaul the legal situation and to provide adequately a chattels .securities law commensurate with Uganda’s state of development and social circumstances and to promote private investment.
  3. The Bill consists of ten Parts and two Schedules. Part I of the Bill deals with preliminary matters including commencement, interpretation.
  4. According to the Bill, for a transaction to create a security interest, it must fulfil the following criteria—
    1. it must be intended only as security; .
    2. it must be a right that is enforceable against any person;
    3. it must be created by grant or declaration of trust and not by reservation;   .
    4. it must be fixed or specific, that is, it must imply a restriction on the debtor’s domination over the asset; and
    5. it must not be taken by the creditor over his or her own obligation to the debtor (i.e. security given by a debtor to a creditor should be for the sole purpose of creating a security interest and not transfer the property of the debtor to the creditor).
  5. At present, although the Chattels Transfer Act does not provide for perfection of a security interest which is a major omission, the Chattels Securities Bill provides for perfection of a security interest by registration in clause 18.


  1. Part II of the Bill deals with creation of security interests and rights of a secured party. Clause 10(1) of the Bill provides that an. agreement to create a security interest is effective according to its terms between the parties to it, and is enforceable against a third party. Clause 10(2) imposes a duty of good faith to apply to both debtor and the secured party.                    .
  2. Part III of the Bill deals with perfection and priority of security interests. Clause 17 provides that a security interest is perfected when it has attached and all steps required for perfection under the Act have been complied with.
  3. Part IV of the Bill deals with registration. Clause 35 of the Bill provides for the Minister to designate a public officer as a registrar of chattel securities for the whole of Uganda and an assistant registrar for areas determined by the Minister. Clause 37 of the Bill requires the registrar to establish and maintain a register of chattels security interests in personal property to be known as the register of securities. Clause 38 of the Bill spells out detailed requirements for a register of chattels book. For instance, the clause requires every instrument to be registered and marked with the date of registration and the number, and to enter in the register the particulars of the instrument as registered in the prescribed form in die register. The clause further requires the registrar to keep an index of the names of grantors and grantees of instruments and to refer to the entries in die register book of the instruments given by each grantor.


  1. Part V of the Bill deals with instruments. Clause 45 of the Bill requires every instrument to be attested by at least one witness and clause 46 provides that an instrument not duly attested or registered shall be void except as against the grantor in respect of the chattels comprised in the instrument.
  2. Part VI of the Bill deals with financing statements. Clause 60 provides that a financing statement may relate to one or more agreements creating a security interest. Clause 61 requires a financing statement to be registered.


  1. Part VII of the Bill spells out rights and remedies. Clause 65 provides for the right to compensation. Remedies range from realisation of collateral by appointment of a receiver,, taking possession and sale by a secured party as well as instituting a legal suit against the debtor on the claims. See clauses 73, 74, 75 and 76. Clause 81 provides for the debtor’s right to redeem the collateral before it is sold by the secured party.
  2. Part VIII deals with sale of chattels. Clause 86 provides that a chattel or any part of the chattel may be sold along with the land to recover payment of money secured in the instrument. Clause 87 provides the mode of sale. Under clause 89, the grantor’s interest in chattels may be sold in execution of a judgment against him or her.
  3. Part IX provides for covenants implied in instruments, these covenants may be enforced severally or jointly against, the parties to the instrument. The covenants bind the patties to the instrument, their executors, administrators and assignees. The covenants may be expressly varied by the parties. See clauses 91, 92, 93 and 94.
  4. Part X deals with miscellaneous matters relating to chattel securities. Clause 95 deals with defrauding or attempting to defraud the grantee. This constitutes an act contrary to honest commercial practice and amounts to breach of the relationship. Clause 96 provides for entitlement to damages for breach of obligations.

Clause 97 empowers the Minister to make regulations for giving better effect to the Act.                         

Clause 99 deals with repeal and savings. Clause 99(1) seeks to repeal the Chattels Transfer Act, Cap. 70. Clause 99(2) of the Bill seeks to .save instruments registered under the repealed Act and provides that they shall continue to be valid for a period not exceeding ninety days from the commencement of the Act, after which the instruments shall be rendered null and void unless executed and registered in accordance with the provisions of the Act.


Deputy Attorney General and Minister of State for Justice and Constitutional Affairs



Bill No. 12       Chattels Securities Bill





                         ARRANGEMENT OF CLAUSES


Part I—Preliminary

  1. Commencement
  2. Interpretation
  3. Agreement giving power of distress by way of security to be instrument


Reservation of title


Collateral in possession or control of debtor


Knowledge of fact in relation to particular transaction


Notice to be in writing


Conflict of laws.


Part II—Creation of Security Interest and


Rights of Secured Party


Creation of security interest


Effectiveness of agreement creating security interest and duty of


good faith


Attachment of security interest


Attachment of security interest in property after it is acquired


Future advances


Rights and duties where collateral is in possession of secured party


Secured party to supply information


Requirements for enforcement against third parties


Part III—Perfection and Priority of Security Interest


Perfection of security interest


Perfection by registration


Perfection by possession of collateral


   Temporary perfection where collateral is delivered or is available


to debtor


Security interest in proceeds


Continuity of perfection




Bill No. 12       Chattels Securities Bill                         2009


  1. Protection of purchasers of goods
  2. Protection of purchasers of chattel paper, negotiable instruments, documents of title and securities
  3. Priorities among conflicting security interests in same collateral
  4. Priority of purchase money security interests                        
  5. Priority where registration ceases to be effective
  6. Priority of negotiable document of title
  7. Priority of lien
  8. Priority of security interests in fixtures
  9. Priority of security interests in crops
  10. Priority of security interests in accessions
  11. Priority where goods are processed or mixed
  12. Priority subject to postponement

Part IV—Registration

  1. Designation of registrar
  2. Registrar’s official seal
  3. Register of chattels securities
  4. Register book and index to be kept
  5. Mode of registration
  6. Time for registration
  7. Duration and renewal or change of registration
  8. Register searches
  9. Certified copies
  10. Fees                                 

Part V—Instruments

  1. Attestation of instrument
  2. Instrument not duly attested and registered to be void
  3. Chattel comprised in registered instrument not to be in possession of grantor
  4. Priority of two or more instruments registered for the same chattel
  5. Form of instrument
  6. Instrument to take effect upon registration                     
  7. Instrument to have inventory of chattels




Bill No. 12



Chattels Securities Bill



  1. Instrument not to affect chattels acquired after execution of instrument
  2. Instrument made subject to condition or declaration of trust
  3. Instrument securing current account
  4. Instruments comprising stock
  5. Instrument comprising crops
  6. Substitution of chattels described in instrument 5 8.    Transfer of instrument
    1. Registration of transfer of instrument

Part VI—Financing Statement

  1. Financing statement
  2. Registration of financing statement
  3. Financing change statement for transferred security interest'
  4. Collateral in registered financing statement
  5. Transfer of debtor’s interest in collateral or change of debtor’s name

Part VII—Rights And Remedies

  1. Right to compensation
  2. Matters in respect of which compensation is payable
  3. Maximum compensation payable
  4. Factors that may prevent or reduce compensation payments
  5. Exemption from liability
  6. State’s right of subrogation
  7. Remedies available where debtor in default
  8. Real and personal collateral
  9. Realisation of collateral
  10. Appointment of receiver
  11. Possession by secured party
  12. Sale by secured party
  13. Treatment of deficiency after sale
  14. Mode of sale
  15. Notice of sale
  16. Effect of sale
  17. Debtor’s right to redeem
  18. Foreclosure




Bill No. 12



Chattels Securities Bill.



  1. Duties of secured party                                            
  2. Secured party’s liability for failure to comply
  3. Rights of landlord or mortgagee                   

           Part VIII—Sale of Chattels                                                         .

  1. Sale of chattel                                                                 
  2. Mode of sale                                                   
  3. Vesting interest in chattels
  4. Grantor’s interest in chattels may be sold in execution of judgment against grantor                                                               
  5. Inter-pleader process not affected by the Act;

Part IX—Covenants Implied In Instruments

  1. Covenants implied in instruments                              
  2. Covenants to be several or joint
  3. Covenants to bind executors, administrators
  4. Covenants may be varied                                                 

Part X—Miscellaneous


First Schedule—Currency Point              

Second Schedule—Covenants implied in instruments





Bill No. 12


Chattels Securities Bill




A BILL, for an Act                      





An Act to regulate the making and enforcement of security interests in chattels; to repeal the Chattels Transfer Act, Cap. 70 and for other related purposes.                                                    

Be it enacted by Parliament as follows:

Part I—Preliminary

  1. Commencement.

This Act shall come into force on a date to be appointed by the Minister, by statutory-instrument.                                                                

  1. Interpretation.                                                          

In this Act, unless the context otherwise requires--;

“accessions” means goods that are installed in or fixed to other goods-                                                          

“cash proceeds” means proceeds in the form of money, cheques, drafts, and deposit accounts in a deposit-taking-institution;




Bill No. 12   Chattels Securities Bill            2009

“chattel” means any moveable property that can be completely transferred by delivery, and includes machinery, book debts, stock and the natural increase of stock, crops and wool, but does not include—                     .

  1. title deeds, choses in action or negotiable instruments;
  2. shares and interests in the stock, funds or securities of any government or local authority;
  3. shares and interests in the capital or property of any company or other corporate body; or
  4. debentures and interest coupons issued by any government, or local authority, company or other corporate body;

“chattel paper” means one or more documents that evidence-—

  1. a monetary obligation and a security interest in a lease of specific goods; or
  2. a lease of specific goods.;

“chose in action” means a right which can be enforced in court;

“collateral*’ means personal property that is subject to a security interest;

“consumer goods” means goods that a debtor uses or acquires for use primarily for personal, family or household purposes; and the determination whether goods are consumer goods for the purposes of a security interest is made at the time the security interest in the goods attaches;

“court” means a court of competent jurisdiction;

“crops” means crops, whether matured or otherwise, and whether naturally grown or planted, attached to land by roots or forming part of trees or plants attached to land, but does not include trees;





Bill No. 12       Chattels Securities Bill                         2009

“currency point” has the value assigned to it in the First Schedule;


“debtor” means—

  1. a person who owes payment or performance of a secured obligation, whether or not that person owns or has rights in the collateral;
  2. a seller of receivables;
  3. a lessee under a lease for a term of more than three

years; or

  1. where the debtor and the owner of the collateral are not

the same person—

  1. in any provision dealing with the collateral, the owner of the collateral;
  2. in any provision dealing with the obligation, the person under the obligation; and
  3. both the debtor and the owner, where the context permits or requires;

“document of title” means a document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the goods it covers; and includes a bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods; and is issued by or addressed to a bailee and relates to goods in the possession of the bailee that are identified Or are tangible portions of an identified mass;

“executed” means signed by the grantor or his or her attorney;

“financing change statement” means a document relating to a registered financing statement;





Bill No. 12                     Chattels Securities Bill        '