07/04/2017 11:08 AM |
The enactment of the Secured Transactions Order, 2016 ("STO") and the accompanying Secured Transactions Regulations ("STR")(collectively referred to the as "the Legislation") is a significant, comprehensive reform of personal property law that introduces a single approach to dealing with personal property (movable assets) where the main proposition is– "is the personal property transaction one that is recognized under the STO?"
The legal framework established by the STO is two-fold.
Firstly, it provides for rules on the creation, perfection, priority and enforcement of security interests on personal properties (movable assets). This legal framework aims to improve standards of disclosure of information by borrowers and lenders. It provides a credit enforcement framework, whereby a lender is not obliged to initiate court proceedings in order to exercise his right to take possession of collateral that is subject to a security interest, in the event of a default.
Secondly, it establishes a Collateral Registry in AMBD. The Collateral Registry is a national electronic register that lists out security interests over personal properties, it flags that a secured party is claiming a security interest against the personal property of a debtor.
The existence of the Collateral Registry in Brunei Darussalam aims to ease the access of credit to individuals and businesses, particularly the Macro, Small and Medium Enterprises (MSMEs) by enhancing their ability to leverage their personal properties (movable assets) as another alternative source of funding for their working capital.
The Collateral Registry is a credit management tool that can be used by lenders, including banks and finance companies, to identify any potential competing security interests in the same personal property/collateral.
 Security interest is a legal term on personal property (movable asset) that has been pledged, usually to obtain loan. Under the STO, "security interest" means a property right in personal property that is created by agreement and secures payment or other performance of an obligation, regardless of whether the parties have denominated it as a security interest, and includes the right of a seller in an instalment sale or a sale with retained title, but it does not include a personal right against a guarantor or other person liable for the payment of the secured obligation.
 Personal Property (movable asset) is basically any sort of personal property, includes goods, chattel paper, documents of title, intangibles, investment securities, money and negotiable instruments, and that is not land, buildings and fixtures.
PURPOSE OF THE COLLATERAL REGISTRY
The main purposes of the Collateral Registry are:
THE BENEFITS OF THE COLLATERAL REGISTRY
THE COLLATERAL REGISTRY
SECURED TRANSACTIONS ORDER, 2016 and SECURED TRANSACTIONS REGULATIONS 2016
BRIEF STRUCTURE AND CONTENT OF STO
PERSONAL PROPERTY (MOVEABLE ASSETS)
Almost all personal property (movable assets) that creates a security interest may be registered under the Collateral Registry. Immovable assets such as land, buildings and fixtures, transfers of present or future claims to wages, amongst others, falls outside the scope of the Secured Transactions Order.
Some examples of movable assets:
The collateral class of "motor vehicle" may describe a car, truck, motor bike, tractor, trailer, that has a unique serial number.It also describes a boat, ship or other vessel that is intended to be used on water and has a serial number as appearing in the certificate of registration issued under Merchant Shipping Order, 2002.A registration in respect to motor vehicles will always require the identification of a serial number, i.e., chassis number, the year of manufacture, the make or name of the manufacture. In the case of ships, the serial number is as provided by the manufacturer of the ships.
The collateral class of "motor vehicle" may describe a car, truck, motor bike, tractor, trailer, that has a unique serial number.
It also describes a boat, ship or other vessel that is intended to be used on water and has a serial number as appearing in the certificate of registration issued under Merchant Shipping Order, 2002.
A registration in respect to motor vehicles will always require the identification of a serial number, i.e., chassis number, the year of manufacture, the make or name of the manufacture. In the case of ships, the serial number is as provided by the manufacturer of the ships.
A registration in respect to aircraft will always require the identification of a serial number as it appears in the certificate of registration issued under Civil Aviation Order, 2006.
Livestock covers animals, including, cattle, fish, goats, horses, ostriches, poultry, sheep, and other animals. Livestock also includes the unborn young of those animals and products, such as wool, while they are still part of the animal.
Crops and plants, whether grown, growing or yet to be planted, attached to land by roots or forming part of but does not include trees, unless the trees are grown for commercial purposes and sale.
Other goods may be selected as a collateral class to describe all other tangible property that cannot be described by the above collateral classes or as part of all present and after acquired property. This may include art, machinery, or jewelry.
A registration describing the collateral class as "goods: other" may further describe the collateral in the free text field.
DOCUMENTS OF TITLE
A description of "document of title" is intended to cover a document issued by or addressed to a bailee that covers goods in the bailee's possession and states that the goods identified will be delivered to a person specified or to the bearer.
A document or documents, including in electronic form, which evidence both a monetary obligation and a security interest in, or lease of, specific goods or specific goods and accessions. Examples include hire-purchase agreements or conditional sales agreements where a security interest is granted in the agreements themselves.
A writing, whether or not it is in the form of a security certificate, that is recognized in a place in which it is issued or dealt with as a warrant, option, share, right to participate, or other interest in property or an enterprise, or that evidences an obligation of the issuer, and that, in the ordinary course of business, is transferred by -
(i) delivery with any necessary endorsement, assignment, or registration in the records of the issuer or agent of the issuer;(ii) an entry in the records of a clearing house or central securities depository;(iii) an entry in the records maintained for that purpose by or on behalf of the issuer; or(iv) an entry in the records maintained for that purpose by or on behalf of the nominee.
(i) delivery with any necessary endorsement, assignment, or registration in the records of the issuer or agent of the issuer;
(ii) an entry in the records of a clearing house or central securities depository;
(iii) an entry in the records maintained for that purpose by or on behalf of the issuer; or
(iv) an entry in the records maintained for that purpose by or on behalf of the nominee.
It does not include a writing that evidences a monetary obligation that is secured by an interest in land.
This collateral describes collateral that is the currency of Brunei Darussalam or any other country.
Intangible property is any personal property that is not goods, chattel paper, documents of title, investment securities, money or negotiable instruments.
ALL PRESENT AND AFTER‑ACQUIRED PROPERTY – NO EXCEPTIONS
This collateral class is used to describe a security interest in all personal property that the creditor has an interest in at the time of registration as well as property that may be acquired by the creditor after the registration is made.
ALL PRESENT AND AFTER‑ACQUIRED PROPERTY – WITH EXCEPTIONS
This collateral class is used to describe a security interest in all personal property that the creditor has an interest in at the time of registration as well as property that may be acquired by the creditor after the registration is made, with the exception of any property described in free text field. A description of the property that is not subject to the security interest is mandatory.
INFORMATION FOR SECURED PARTIES (LENDERS)
INFORMATION FOR DEBTORS
When you buy personal property on hire purchase, or use personal property as security for a loan or another type of credit providing transaction, the secured party will probably register details of the security interest in the CR Those details include:If you are debtor of an individual:
When you buy personal property on hire purchase, or use personal property as security for a loan or another type of credit providing transaction, the secured party will probably register details of the security interest in the CR
Those details include:
If you are debtor of an individual:
If you are debtor of a registered business/company:
Note that the CR does not record financial details of the transaction, e.g. the amount borrowed or the value of the personal property. This registration is referred to as a financing statement.
You should receive a copy of the information registered on the Collateral Registry.
When the security interest is registered, the secured party (e.g. the bank, finance company, etc.) must send you a verification statement, unless you have waived this right in writing. The verification statement is essentially a copy of the financing statement and tells you what has been recorded about you on the Collateral Registry. A verification statement is produced when a security interest is first registered and each time the registered details are updated.
You have the right to request correction of any inaccurate details.
If you discover that any of the security interest's details recorded on the CR are inaccurate, you have the right to ask the secured party to make correction.
In certain circumstances, you can take the step of lodging a change demand to formally request correction of the registered details. The secured party shall make the changes within 15 working days.
Disposing of property that is subject to a security interest.
If you owe money on personal property you should not sell or dispose of the property without getting permission from the person or company you owe the money to. If the secured party has registered their security interest on the CRS, they may repossess the property from the person you have sold it to. In this situation, that person is likely to seek repayment of the purchase price from you.
The CR should be updated by the secured party once you have repaid the debt.
Once you have repaid your hire purchase or loan, the secured party must discharge the registered financing statement. This means that the financing statement will no longer appear on the live register or be available for general searching. In the case of consumer goods, this should be done within 15 working days.
 Registered under the Business Names Act
 Registered under the Companies Act (Chapter 39)
XYZ takes a turn for the worst, and Awang Abu decides to go back to Alif Bank and get a second loan over the same vehicle. The Alif Bank's bank manager signs him up, and as he has already registered Alif Bank's interest previously, has now 'perfected' Alif Bank's interest.
XYZ falters completely and is placed in liquidation. Who has first priority in the funds from sale of the vehicle? If you said Ba Bank then you would be mistaken. Despite being first in time with their loan, they were not first in time registering their interest, and additionally failed to carry out a search on the vehicle, and so they lose out to Alif Bank.
FREQUENTLY-ASKED QUESTIONS (FAQs)
A: To protect the rights of creditors when a debtor (the borrower) becomes bankrupt or insolvent.
Q: What is the role of AMBD's Collateral Registry office?
A: The role of the Collateral Registry Office is solely for the purpose of administration of the Collateral Registry.
Q: What is the benefit of the Collateral Registry?
A: An increased opportunity exists for businesses to use personal property as collateral for finance, enabling the securing of capital for growth. There is also an increased level of transparency with security interests being registered and available for searching.
Q: How do I get access to the Collateral Registry?
A: You can access the Collateral Registry online athttps://crs.ambd.gov.bn, where you can do a public search.
Q: Where can I get more information on Collateral Registry?
A: For further enquiry, you may email directly to us firstname.lastname@example.org
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