SECURED TRANSACTIONS ACT

Arrangement of Sections

1. Short title.

PART I

Application of the Law

2. Scope of the Act.

3. Exemption from the application of this Act.

4. Objective.

5. Validity of a secured interest.

6. More than one obligation may be secured by the same collateral.

PART II

Secured Transactions

7. Maintenance of Secured Transaction Register.

8. Duties of the Filing Office.

9. Information from Credit Information Bureau Office of Sri Lanka.

10. All documents entered in the Register to be public documents.

11. Contents of initial notice.

12. Name of the debtor and secured party.

PART III

Amendment, Continuation and Termination of the Notice

13. Effect of changes.

14. Validity of a notice.

15. Amendment of notice.

16. Continuation of notice.

17. Termination of notice.

18. Effectiveness of notice.

19. Claim concerning inaccurate or wrongfully filed notice.

20. Registration of notice.

21. Duty to give information.

PART IV

Miscellaneous

22. Rules.

23. Regulations.

24. Sinhala text to prevail in case of inconsistency.

25. Interpretation.

49 of 2009.

AN ACT to provide for the securing of obligations in respect of movable property, maintenance of a secured transactions Register; and for matters connected therewith or incidental thereto.

[Date of Commencement: 25th September, 2009]

1. Short title.

This Act may be cited as the Secured Transactions Act.

PART I

Application of the Law

2. Scope of the Act.

Notwithstanding anything contained in any other law any person who—

(a) pledges, enters into a purchase agreement, conditional transfer, finance leasing agreement or mortgage of any movable property, assignment of accounts or other rights of payment of consignment;

(b) enters into an agreement for sale of accounts and chattel paper;

(c) enters into a lease agreement in respect of a movable property for a period exceeding one year;

(d) gives any undertaking in terms of section 2 of the Inland Trust Receipts Act, No. 14 of 1990; or

(e) gives any undertaking of any consignment of goods imported into Sri Lanka in terms of section 2 of the Trusts Receipts Ordinance, may secure such pledge, mortgage or obligation, as is specified in items (a), (b), (c), (d) or (e) with a collateral in accordance with the provisions of this Act:

Provided however the application of the provisions of this Act shall not depend on the ownership of the collateral:

Provided further the period of such obligation shall extend for a period exceeding one year.

3. Exemption from the application of this Act.

The following transactions shall be exempt from the application of the provision of this Act—

(a) the transfer of a claim for compensation of an employee;

(b) the sale of accounts or chattel papers arising out of a part of a sale of a business;

(c) the assignment of accounts or chattel paper instrumental for the purpose of collection only;

(d) an obligation under a contract to assign the right of payment to an assignee; and

(e) the transfer of an interest in goods held by the debtor as equipment or consumer goods, where the goods are registered under the Motor Traffic Act, No. 8 of 2009, Sri Lanka Ports Authority Act, No. 52 of 1979, the Merchant Shipping Act, No. 52 of 1971, the Civil Aviation Authority Act, No. 34 of 2002, respectively.

4. Objective.

The objective of the Act is to promote the interest of the national economy and economic activity in accordance with the provisions of this Act and regulations made thereunder, by securing a pledge, mortgage or obligation specified in section 2 of this Act by utilising collateral recognised by sections 2 and 3, in the manner specified.

5. Validity of a secured interest.

Any mortgagor, pledger, conditional transferor, lesser or assignor may accept a collateral for securing such mortgage, pledge, conditional transfer, financial lease or assignment:

Provided however no such person shall accept any secured interest other than a secured interest in the purchase money of consumer goods belonging to the debtor:

Provided further such security interest may not be deemed to be invalid due to the rights enjoyed by the debtor to use, sell, exchange or otherwise dispose of such security.

6. More than one obligation may be secured by the same collateral.

Any interest in a collateral offered by a debtor to secure an obligation, may be utilised to secure more than one obligation.

PART II

Secured Transactions

7. Maintenance of Secured Transaction Register.

(1) There shall be maintained a Secured Transactions Register (hereinafter referred to as the "Register”) which shall for the purposes of this Act be maintained by the Credit Information Bureau of Sri Lanka established under the Credit Information Bureau of Sri Lanka Act, No. 18 of 1990. In addition to the powers specified in the said Credit Information Bureau of Sri Lanka Act, the Bureau shall have the following powers, duties and functions—

(a) to maintain in the manner as prescribed the Register of Secured Transactions and the process of registration of security interest of movables in such Register;

(b) to register a notice of a security interest in collateral filed by any person specified in item (a), (b), (c), (d) and (e) of section 2;

(c) to register a notice of interest of a judgment-creditor; and

(d) to maintain records of all expired notices for a period of ten years from the date of expiry thereof.

(2) The powers, duties and functions in relation to registration of security interest of movables shall be carried out by the officers and servants of the Bureau under the directions of the Board of Directors of the Credit Information Bureau of Sri Lanka appointed under section 5 of the Credit Information Bureau of Sri Lanka Act, No. 18 of 1990:

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