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Security, Enforcement and Insolvency

Angola

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts);
(B) inventory (stock in trade);
(C) shares of a company (issued and authorised);
(D) equipment;
(E) real property;
(F) insurances; and
(G) project contracts.

Pledges may be created over all movable (e.g.: shares, accounts receivable, etc) and immovable assets, although on all immovable assets (real property specifically) the pledge has to be created by means of a public deed and subsequent registration. Other types of security bringing any restriction to the disposal of the assets shall be examined on a case by case basis although, in general, this security shall be of a contractual nature only. The pledge of rights is conditioned to the rights referring to a movable asset and to that movable asset being transferrable.

(ii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Charges can be created over shares in order to guarantee loans.

Shares can be validly pledged and the pledge can be enforced under an English law share charge although it might be of interest to the claimant to submit the securities to Angolan law as the system of recognition of foreign judicial decisions may be time consuming and even more complicated than the prosecution of the legal action regarding the said pledge, in Angola.

(iii) Debt obligations: can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

A company can provide various types of security only in order to secure its obligations. According to the legal Angolan system several types of securities may be granted, such as mortgages, liens, pledges, etc.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

No.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

Security agents and trustees do not exist in Angola.

(vi) Please indicate the claims that would have priority over the relevant security interests.

In some situations the government is considered as a preferred creditor and so do the workers. Creditors with pledges or mortgages are also considered as preferred creditors.

(vii) Is there a public security registry?

There is a commercial public registry's office.

(viii) Formalities in respect of security creation:

(A) Statutory perfection requirements;
(B) Any other formalities
(C) Steps for perfection and length of time taken
(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

The costs and time required for the establishment of loan guarantees will vary depending on the type of guarantee. There are security procedures, such as pledges, that do not require many formalities, while others, such as mortgages, are subject to greater formalism and charges, in particular, require a public deed, settlement and registration duties and stamp duty.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

There is a commercial public register office.

(ii) Summary of the different options for an insolvency related process.

The law determines that the merchant unable to meet its obligations is considered insolvent.

The Civil Procedure Code ("CPC") has some steps to recover insolvent companies, which are listed below:

  • The agreement (Concordata)

When a company finds itself unable to fulfil its obligations, before the cessation of payments or within ten days after the termination, it has a duty to file at court for a declaration of bankruptcy and request the convening of its creditors (article 1140 of the CPC). Following the petition, the court shall appoint an administrator to manage the company and prepare a report and a proposal for a composition of the credits. This report and proposal shall be submitted to the approval of the creditors in a general meeting and once it is approved it becomes mandatory.

  • The agreement of creditors

If there was no proposal for a composition or in the event of having been adopted the creditors may decide on setting up a limited liability company (sociedade por quotas) in order to continue to operate the business. The shares of the creditors are represented by the corresponding value of their claims after deducting the amounts for claims relating to those who have not signed the agreement.

  • The bankruptcy

In the absence of bankruptcy or creditors' agreement, that agreement had been reached with creditors and this agreement was rejected by the court, the debtor's bankruptcy should be immediately enacted (article 1173 of the CPC), at the request of any creditor, of the public prosecutor in the case mentioned in section b) of paragraph 1 of article 1174 of the CPC or ate the presentation of the merchant outside the period provided in article 1140 of the CPC.

(iii) Are summary or expedited proceedings available?

Apart from the possibility of choosing arbitration, in Angola there is no special jurisdiction for business or commercial cases.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

Please contact us for further information.

(B) the enforcement of a security interest in other assets; or

Please contact us for further information.

(C) the enforcement of a guarantee (sovereign or otherwise)?

Please contact us for further information.

There is no need for governmental authorisation to initiate legal proceedings for debt recovery and enforcement of secured interests, nor to enforce a guarantee.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Upon take-over of the Company, whatever the reason shall be, the rights and liabilities of the company shall be transferred to the responsibility of the new shareholders of the company. However, lenders may contractually foresee the right to (judicially) demand the former shareholders for any liabilities (more likely to be expressed financially) regarding the time before acquisition of the shares by the lenders.

(vi) Enforcement of security: can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Yes, as long as it is done through a legal proceeding.

Guinea

(a) Overview of security regime

(i) Nature of security: can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts): Pledge

(B) inventory (stock in trade): Pledge

(C) shares of a company (issued and authorised): Pledge

(D) equipment: Pledge

(E) real property: Mortgage

(F) insurances: Pledge

(G) project contracts: Cession or Pledge

(ii) Shares: can shares of a project company validly be pledged and enforced under an English law share charge?

Shares of commercial company are validly pledged and enforced under the Uniform Act of OHADA (Organization for the Harmonization of Business Law in Africa) on security.

(iii) Debt obligations: can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes. Enforceability and priority are subject to registration.

(iv) Revolving credit facility: if the borrowings to be secured are under a revolving credit facility, is there any special priority or other concerns?

There are no special laws or regulation relating to a revolving credit facility.

(v) Security agent/trustee: can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time under a credit facility agreement, where the identity of the lenders may change from time to time because of transfers (effected either by assignment or novation) by certain lenders of their interests in the credit facility? Are any steps required to ensure that a transferee of a lender will receive the benefit of the relevant security interests?

The Uniform Act of OHADA on security does not mention the concept of security trustee.

(vi) Preferred creditors: please indicate the claims that would have priority over the relevant security interests.

1. The rank following the liquidation of the immovable property is as follow (article 148 of the uniform act on security):

1.1. Court costs

1.2. Unpaid wages

1.3. Mortgages

1.4. General privileges subject to publicity

1.5. General privileges not subject to publicity

1.6. Unsecured creditors with an enforceable title

2. The rank following the liquidation of the movable property is as follows (article 149):

2.2. Court costs

2.3. Expenses incurred to hold the assests of the debtor

2.4. Unpaid Wages

2.5. Pledges

2.6. Pledges or privileges subject to publicity

2.7. Special privileges

2.8. General privileges not subject to publicity

2.9. Unsecured creditors with an enforceable title

(vii) Public registry: please confirm if there is a public registry that can be searched to confirm whether a project company has any security documents or any document dealing with any finance arrangement in place, such as guarantees, indemnities or suretyships given by or for the benefit of a project company.

Yes, at the register of trade and credit in Conakry.

(viii) Formalities: in connection with the creation of a security interest in shares or other assets:

(A) are any governmental or other consents or filings (consider exchange control and similar regulations, perfection, etc.) required;

Security interest must be made by deed or by private act duly recorded. This act is effective only if it is registered at the register of trade and credit (art 45-65-119 on security)

Pledge must, on pain of nullity, contain the following mention (art 70):

  1. Name and domicile of the creditor and debtor,
  2. Number of commercial matriculation at the register of trade
  3. Head office
  4. Description of objects subject to a pledge
  5. Amount of the claim
  6. Status of the debts and liabilities interests
  7. Election of domicile (registered address)

(B) are any other formalities (for example, notice to creditors, shareholder approvals, notarisations, etc.) required; and

Pledging of shares is not possible without the approval of the majority of shareholders, representing the

Ivory Coast

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

(A) Accounts receivable (book debts) - yes, by way of pledge

(B) Inventory (stock in trade) - yes, by way of pledge

(C) Shares of a company (issued and authorised) - yes, by way of pledge

(D) Equipment - yes, by way of pledge

(E) Real property - yes, by way of mortgage

(F) Insurances - yes, by way of pledge

(G) Project contracts - yes, by way of pledge

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

Shares of commercial company are validly pledged and enforced under the Security Code.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

The Project Company can grant security interests over its assets to secure borrowings.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

There are no special laws or regulation relating to a revolving credit facility in Ivory Coast.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

The concept of security trustee is not provided for under the Uniform Act of OHADA on security.

(vi) Claims that would have priority over the relevant security interests.

(A) The priority following insolvency in respect of claims against immovable property is as follows

(I) Costs of the court and the legal process

(II) Unpaid salary

(III) Mortgages

(IV) General privileges subject to publicity

(V) General privileges not subject to publicity

(VI) Unsecured creditors with an enforceable title

(B) The priority following insolvency in respect of claims against movable property is as follows

(I) Costs of the court and the legal process

(II) Expenses incurred to hold the assets of the debtor

(III) Unpaid salary

(IV) Pledges

(V) Other privileges subject to publicity

(VI) Special privileges

(VII) General privileges not subject to publicity

(VIII) Unsecured creditors with an enforceable title

(vii) Is there a public security registry?

The register of trade and credit can be consulted to confirm whether a company has any security registered by or against it.

(viii) Formalities in respect of security creation:

(A) Statutory perfection requirements;

A security interest must be made by deed or by private act duly recorded. This act is effective only if it is registered at the register of trade and credit.

A pledge must, to avoid being void, contain the particulars set out by article 70 of the Security Code.

(B) Any other formalities

Pledging of shares is not possible without the approval of the majority of shareholders, representing 75% + 1 of the issued share capital.

(C) Steps for perfection and length of time taken

(I) See above at (A)

(II) Provisional registration and enrolment must be taken respectively, following the decision authorizing the pledge.

(III) Registration retains the right of creditor for 5 years. After which a renewal must be done.

(IV) Pledge must be delivered to the company.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

The notary fee is significant but can be subject to negotiation.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

Yes, the register of trade and credit can be searched in respect of proceedings and insolvency actions.

(ii) Summary of the different options for an insolvency related process.

Insolvency processes are set out in the Uniform Act of OHADA on the organization of simplified procedures for debt recovery.

In brief, 8 days after an unsuccessful payment order, the creditor may proceed with the seizure of the secured assets. Seizure must be notified to the debtor within 8 days. A minute is then drafted. One month from the service of the minute on the debtor, a forced sale may be initiated if the goods have not been sold privately before that point.

(iii) Are summary or expedited proceedings available?

There is no special article in Ivory Coast's regulations providing the expedited proceedings.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

The mechanism is prescribed by the Uniform Act of OHADA related to the procedures of debt recovery.

(B) the enforcement of a security interest in other assets; or

The mechanism is prescribed the Uniform Act of OHADA related to the procedures of debt recovery.

(C) the enforcement of a guarantee (sovereign or otherwise)?

The mechanism is prescribed by the Uniform Act of OHADA related to the procedures of debt recovery.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Yes, lenders (or any other owner) would inherit all environmental liabilities when they become owner of the shares.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Yes. The uniform act on organization of simplified procedures for debt recovery lists the steps to follow when enforcing security.

Kenya

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets e.g.:

(A) accounts receivable (book debts); Yes.

(B) inventory (stock in trade); Yes.

(C) shares of a company (issued and authorised); Only issued shares.

(D) equipment; Yes.

(E) real property; Yes.

(F) insurances; No. and

(G) project contracts; Yes.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

Yes.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes, provided the memorandum and articles of association allow for the same. (iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

Please contact us for further information.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

The concept of a trust is recognised in Kenya and it is therefore possible to appoint a security agent/trustee. In addition the original lenders can be changed by way of assignment or novation.

(vi) Please indicate the claims that would have priority over the relevant security interests.

Please contact us for further information.

The following order of priority would take precedence over (a) other unsecured creditors and (b) secured creditors, with regard to any assets charged in favour of such creditors by way of floating charge:

(A) all taxes and local rates due at the relevant date and having become due and payable within twelve months before that date not exceeding in the whole one year's assessment;

(B) all government rents not more than one year in arrears;

(C) employees' (other than directors') wages or salary for four months prior to the relevant date and all workman's or labourers' wages for services rendered, not in either case exceeding K.Shs. 20,000.00 per individual claimant;

(D) all retirement benefits contributions of any employee of the Company not exceeding K.Shs. 20,000.00;

(E) amounts due by way of workmen's compensation;

(F) amounts due in respect of contributions payable during the period of 12 months immediately preceding the relevant date under the National Social Security Fund Act, Chapter 258 of the Laws of Kenya.

(vii) Is there a public security registry?

There are two types of registries in Kenya. The first, is the lands registry where any security created over any immovable property owned by the company, or its affiliates, is registered. The second, is the companies registry where debentures and charges created by a company are registered.

(viii) Formalities: in connection with the creation of a security interest in shares or other assets:

(A) Statutory perfection requirements;

The consent of the Commissioner of Lands (or other head lessor) is required for the perfection of a security interest in a property leasehold. It is a requirement that the security interst is filed the Lands Registry and Companies Registry, the Companies Registry will issue a Certificate of Registration for Charges and Debentures.

(B) Any other formalities

A company's board resolutions are required for the creation of security interests. In addition, if a company has created previous securities, it is required to give notification of such securities to its existing secured creditors.

(C) Steps for perfection and length of time taken

Following the due execution of the security documents, the documents are sent for stamping which takes approximately seven (7) working days. Thereafter, the documents have to be registered at the Companies Registry which would take approximately five (5) working days. Moreover, in the event that there is a charge over the property, the documents would have to be registered at the Lands Registry, which takes approximately seven (7) working days.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant interest?

Time delays are common in Kenya as both the lands and companies registries are poorly organised and files are often misplaced.

(b) Insolvency and enforcement regime receivership

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

There is a court register which is open to the public but is yet to be computerised. Therefore one can search the register for ongoing proceedings and insolvency actions.

(ii) Summary of the different options for an insolvency related process.

(A) Kenya does not have a specific insolvency statute in force. However, the insolvency, receivership and liquidation of companies is within the ambit of the Companies Act. According to the Act, a company may be wound up pursuant to the said act through:

(I) a compulsory winding up by the court;

(II) a voluntary winding up, which may be either a member's voluntary up or a creditor's voluntary winding up; or

(III) a winding up subject to the supervision of the High Court.

In all the aforementioned scenarios, after the decision is made to wind up the company either through a court process or members' resolution the assets of the company vest in the liquidator, who winds up the company.

(iii) Are summary or expedited proceedings available?

Kenyan debentures provide for the appointment of a receiver. The power to appoint a receiver can be exercised at any time by the debenture holder and this appointment is not supervised by a court. There are no restrictions on a debenture holder to refrain from exercising its rights of appointing a receiver as this could result in a loss to the company and its unsecured creditors.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares; No.

(B) the enforcement of a security interest in other assets; No. or

(C) the enforcement of a guarantee (sovereign or otherwise)? No.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

The definition of "owner" under EMCA is relatively wide and therefore lenders would inherit environmental liabilities upon enforcement.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

There are two statues that form the substantive law for land in Kenya:

(A) The Registered Land Act (Cap 300) ("RLA"); and

(B) The Transfer of Property Act, 1882 ("TPA").

Under the RLA an auctioneer must be appointed and a public auction conducted when a lender exercises the power of sale. Under the TPA private treaty is an acceptable method of selling the property. Hence, the Court does not carry out the enforcement of the security interests.

Madagascar

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets e.g.:

Debt security, stock in trade, shares of companies and equipment can all be pledged.

Real property can be subject to a mortgage. The right of preference is also, by subrogation, applicable to any insurance on the buildings affected.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

The shares of commercial companies can be pledged and enforced by the Code on Security (law n0 2003-041 of 03 September 2004).

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes. Enforceability and priority are subject to registration.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

There are no special laws or regulation relating to a revolving credit facility.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

The concept of a security trustee is allowed under Malagasy law. Security generally is governed by the Security Code.

(vi) Please indicate the claims that would have priority over the relevant security interests.

The rank is as follow:

(A) Costs of the liquidation

(B) Salaries

(C) Taxes

(D) Security interests

(E) Unsecured creditors

(F) Public registry: please confirm if there is a public registry that can be searched to confirm whether a project company has any security documents or any document dealing with any finance arrangement in place, such as guarantees, indemnities or suretyships given by or for the benefit of a project company.

(vii) Is there a public registry?

Yes, searches are done at the Company Registry or the tribunal.

(viii) Formalities in respect of security registry?

(A) Statutory perfection requirements;

The creation of a security interest is subject to shareholders approvals, and registration with the relevant authorities.

(B) Any other formalities; and

Notarisation is optional but gives additional security.

Notice to creditors is advisable but not mandatory.

(C) Steps for perfection and length of time taken

See above at (A). The whole process from execution to registration lasts 2- 4 weeks.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

Yes, Notary fees are high but negotiable. Registration fees are 0.5% of the secured amount without limit.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

Yes, searches can be made at the Tribunal and RCS.

(ii) Summary of the different options for an insolvency related process.

Insolvency processes are set out in law n o 2003-042 of 03 September.

There are three steps regarding the insolvency process: the initiation of the reorganisation; the appointment receiver; and the winding-up.

(A) Expedited proceedings: are summary or expedited proceedings available based on the existence of a note, perhaps governed by the laws of the jurisdiction, or is there any other documentation or are there any steps that could be taken to gain the availability of expedited proceedings (or other priority) in the jurisdiction?

(B) Realisation of security registered before a notary is easier and quicker than un-notarised secured /documents.

(C) Governmental or other consents: are any governmental or other consents (consider exchange control and similar regulations) required in connection with:

(D) The enforcement of a security interest in shares;

The enforcement of a security interest in shares needs the Commercial Court consent.

(E) The enforcement of a security interest in other assets; or

The enforcement of a security interest in other assets needs the Commercial Court consent.

(F) The enforcement of a guarantee (sovereign or otherwise)?

The enforcement of a security interest in guarantee needs the Commercial Court consent.

(iii) Are summary or expedited proceedings available?

Lenders inherit all environmental liabilities when they become owners of the shares (MECIE Decree).

(iv) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

The initiation of the liquidation of assets can only result from a ruling of the Commercial Court, which appoints a trustee to carry out the operation. The sale may take place either by private sale or by public auction (Insolvency Code articles 181, 183, 187).

Mali

(a) Overview of security regime

(i) Nature of security: can a security interest be obtained over a company's assets, e.g.:

  • Accounts receivable (book debts): Pledge
  • Inventory (stock in trade): Pledge
  • Shares of a company (issued and authorised): Pledge
  • Equipment: Pledge
  • Real property: Mortgage
  • Insurances: Pledge
  • Project contracts: Cession or Pledge

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

Shares of commercial company are validly pledged and enforced under the Uniform Act of OHADA (Organization for the Harmonization of Business Law in Africa) on security.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes. Enforceability and priority are subject to registration.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

There is no special legislation relating to an revolving credit facilities.[3]

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

The Uniform Act of OHADA on security does not refer to the concept of security trustee.[4]

(vi) Please indicate the claims that would have priority over the relevant security interests.

Priority following the liquidation of immovable property is as follow (article 148 of the Uniform Act on Security):

(A) costs of the court and legal process

(B) unpaid salary

(C) mortgages

(D) general privileges subject to publicity

(E) general privileges not subject to publicity

(F) unsecured creditors with enforceable title

Priority following the liquidation of the movable property is as follows (article 149 of the Uniform Act on Security):

(A) costs of the court and legal process

(B) expenses incurred to hold the assests of the debtor

(C) unpaid salary

(D) pledges

(E) other privileges subject to publicity

(F) special privileges

(G) general privileges not subject to publicity

(H) unsecured creditors with enforceable title

(vii) Is there a public security registry?

The commercial registry can be searched for security information.

(viii) Formalities in respect of security creation:

(A) Statutory perfection requirements;

Security interest must be made by deed or by private act duly recorded. This act is effective only if it is registered at the register of trade and credit (art 45-65-119 on security)

(B) Any other formalities.

Pledging of shares is not possible without the approval of the shareholders representing 75% +1 of the issued share capital.

(C) Steps for perfection and length of time taken

Provisional registration and enrolment must be taken respectively, following the decision authorising the pledge.

Registration retains the right of creditor for 5 years. After which a renewal must be done.[5]

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

Stamp duty and notarial fees are charged ad valorem which can be a significant.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

Yes, the commercial registry and the court records may be searched.

(ii) Summary of the different options for an insolvency related process.

Insolvency procedures are set out in the OHADA Uniform Act for the simplified procedures for debt recovery.

(iii) Are summary or expedited proceedings available?

No special provision for these proceedings.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

Formalities are prescribed by the Uniform Act of OHADA related to the procedures of debt recovery.

(B) The enforcement of a security interest in other assets; or

Formalities are prescribed the Uniform Act of OHADA related to the procedures of debt recovery.

(C) The enforcement of a guarantee (sovereign or otherwise)?

Formalities are prescribed by the Uniform Act of OHADA related to the procedures of debt recovery.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Lenders inherit all environmental liabilities when they become owner of the shares.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

The Uniform Act on organisation of simplified procedures for debt recovery lists the steps to follow when enforcing security.[6]

Mauritius

(a) Overview of security regime

(i) Nature of security: can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts);
(B) inventory (stock in trade);
(C) shares of a company (issued and authorised);
(D) equipment;
(E) real property;
(F) insurances; and
(G) project contracts.

Security interests may be taken in respect of the above in accordance with the laws of Mauritius.

(ii) Shares: can shares of a project company validly be pledged and enforced under an English law share charge?

The shares of a project company may be validly pledged and enforced according to the requirements specific to Mauritius law.

(iii) Debt obligations: can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Security may be granted by a company to secure its debt obligations and provided that it is in the best interests of the company, as a guarantor of the obligations of other borrowers and/or guarantor of obligations under a credit facility.

(iv) Revolving credit facility: if the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

There are no special priorities or concerns in respect of a revolving credit facility.

It must be noted however that under the laws of Mauritius secured claims are repaid in order of the following priority:

  1. Costs of liquidator
  2. Amounts due to Government and its Agencies
  3. Wages or salaries due to employees
  4. Costs of compromise with creditors
  5. Payments made pari passu with first ranking fixed and floating charges and mortgages (hypotheque conventionelle) inscribed for more than three years
  6. a landlord's special privilege in respect of a rent
  7. First ranking, fixed and floating charges and mortgages (hypotheque conventionelle) inscribed for less than three years
  8. Claims of victims of an accident
  9. Other privileges, securities and creditors
  10. Amounts due to the Government of Mauritius and its agencies in relation to amounts due and unpaid for over three months
  11. Claims of all other unsecured creditors who have proved in the bankruptcy or winding up

(v) Security agent/trustee: can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time under a credit facility agreement, where the identity of the lenders may change from time to time because of transfers (effected either by assignment or novation) by certain lenders of their interests in the credit facility?

This is permissible under the laws of Mauritius.

Are any steps required to ensure that a transferee of a lender will receive the benefit of the relevant security interests?

Under Mauritius law, upon the assignment of a secured claim, the security relating to such secured claim is automatically transferred to the assignee. The assignment of interests in respect of a facility between lenders will thus necessarily include the assignment of the relevant security interests to the relevant assignee. It is advisable however to enter into specific assignment documentation witnessing the assignment of the benefit of the relevant security interests

Depending on the nature of the assigned security, relevant notifications and filings will have to be made.

By way of example an assignment of a pledge over shares of a company will have to be notified to the secretary of a company in order to enable the latter to update the records on that company.

(vi) Preferred creditors: please indicate the claims that would have priority over the relevant security interests.

Please refer to the response given in paragraph 1.4 (iv) above in respect of the priority of claims.

(vii) Public registry: please confirm if there is a public registry that can be searched to confirm whether a project company has any security documents or any document dealing with any finance arrangement in place, such as guarantees, indemnities or suretyships given by or for the benefit of a project company.

Searches may be effected at the Registrar General in respect of a charge, mortgage and privilege and also at the Registrar of Companies for domestic companies provided that all returns and filings are up to date.

(viii) Formalities: in connection with the creation of a security interest in shares or other assets:

(A) are any governmental or other consents or filings (consider exchange control and similar regulations, perfection, etc.) required;

(B) are any other formalities (for example, notice to creditors, shareholder approvals, notarisations, etc.) required; and

(C) what steps are required to register or otherwise perfect security in the jurisdiction and how long do these steps typically take ?

(D) are there any significant financial costs (including stamp tax, registration, notarial fees, etc.) or significant time delays which would be required in order to create and perfect the relevant security interest?

The filings and perfection steps required depends on the nature of the security interests to be created.

By way of example, a pledge over shares will be perfected immediately upon completion of the following:

(a) the share certificates representing the pledged shares have been remitted to the pledgee;

(b) the company secretary of the company whose shares are pledged have provided written evidence that the pledge has been duly inscribed in the share register; and

(c) an undated share transfer form signed by the transferor only has been remitted to the pledgee.

On average the time taken to perfect a security interest does not take more than 1 week.

(b) Insolvency and enforcement regime

(i) Public register: is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

There is only a public register kept by the Director of Insolvency Service in respect of the discharged and undischarged individuals who have been adjudicated as bankrupt and persons who are subject to a summary instalment order.

(ii) Insolvency process: please provide a summary of the different options for an insolvency related process.

Pursuant to the Insolvency Act 2009, a company may be:

(a) wound up by way of intervention of court or its members or by creditors to the company; or
(b) put into receivership; or
(c) put into administration.

(iii) Expedited proceedings: are summary or expedited proceedings available based on the existence of a note, perhaps governed by the laws of the jurisdiction, or is there any other documentation or are there any steps that could be taken to gain the availability of expedited proceedings (or other priority) in the jurisdiction?

There are none.

(iv) Governmental or other consents: are any governmental or other consents (consider exchange control and similar regulations) required in connection with:

(A) the enforcement of a security interest in shares;

In the event that a security interest in shares is enforced in favour of a non-citizen, permission from the relevant authorities in respect of acquisition of immovable properties in accordance with the Non-Citizen's (Property Restriction) Act is required.

(B) the enforcement of a security interest in other assets; or

In the event that a security interest in immovable property is enforced in favour of a non-citizen, permission from the relevant authorities in respect of acquisition of immovable properties in accordance with the Non-Citizen's (Property Restriction) Act is required.

(C) the enforcement of a guarantee (sovereign or otherwise)?

No consent is required.

(v) Environmental liabilities: do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Lenders may assume liabilities if they enforce security and acquire the assets as environmental liabilities attach to the property right in a given project.

(vi) Enforcement of security: can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Except where the enforcement must be mandatorily carried out by public auction or court intervention, a security under a security agreement may be validly enforced in accordance with the terms of the security documentation without the need for any judicial intervention.

Morocco

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts); Yes.

(B) inventory (stock in trade); Yes.

(C) shares of a company (issued and authorised); Yes, subject to any preliminary approval if provided in by laws or shareholder agreement.

(D) equipment; Yes.

(E) real property; Yes.

(F) insurances; Yes, under delegation mode.

(G) project contracts. Yes, subject any restrictive third parties preliminary approvals.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

No. Enforcement should be made in Morocco and under applicable Moroccan laws.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

There are no special priority or other concerns regarding security under a revolving credit facility.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

Yes.

(vi) Are any steps required to ensure that a transferee of a lender will receive the benefit of the relevant security interests?

Valid notice to the borrower should be organised.

(v) Please indicate the claims that would have priority over the relevant security interests.

The following claims would have priority over the relevant security interest; tax, social security contribution and salaries of the project employees.

(vi) Is there a public security registry?

Yes: for a trade registry certificate or any document dealing with any finance arrangement in place.

No: for guarantees, indemnities or suretyships given by or for the benefit of a project company.

(vii) Formalities in respect of security creation:

(A) Statutory perfection requirements;

Are any governmental or other consents or filings (consider exchange control and similar regulations, perfection, etc.) required?

In general, the foreign exchange authority must approve any project regarding the international transfer of funds are to be implemented.

(B) Any other formalities.

Are any other formalities (for example, notice to creditors, shareholder approvals, notarisations, etc.) required?

Yes, but depending the type of deeds. Generally, official documents must be notarized/legalized.

(C) Steps for perfection and length of time taken

What steps are required to register or otherwise perfect security in the jurisdiction and how long do these steps typically take?

Judicial proceedings generally consist of a public auction sale of the secured asset is necessary by law. The proceeds are delivered to the claimant creditor after the auction.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

Are there any significant financial costs (including stamp tax, registration, notarial fees, etc.) or significant time delays which would be required in order to create and perfect the relevant security interest?

There are generally stamp and registration costs for any security document to have the document dated and make it binding.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

There is a Trade registrar that can be searched to attain information regarding proceedings and insolvency actions.

(ii) Summary of the different options for an insolvency related process.

Generally, insolvency process commences when court orders the entity that is unable to pay its creditors. Therefore, the entity enters into the two step insolvency procedure: First, the initial 6 month period is renewable if reorganization is possible under the control of a receiver and of a court judge. Second, if such reorganization becomes impossible, the entity is subject to liquidation of its assets. To pay its creditors, first ranking the privileged (tax, social security and employees), secured (creditors benefiting of any registered security) and unsecured creditors.

 

 

 

(iii) Are summary or expedited proceedings available?

There are no expedited proceedings available.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

In general, foreign exchange authority approval is required.

(B) the enforcement of a security interest in other assets;

Same as above.

(C) the enforcement of a guarantee (sovereign or otherwise)

Same as above.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

The entity and the shareholders have the duty to comply with all environmental liabilities.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Yes.

Mozambique

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts);
(B) inventory (stock in trade);
(C) shares of a company (issued and authorised);
(D) equipment;
(E) real property;
(F) insurances; and
(G) project contracts.

Yes, in principle, the law does not prevent to obtain security interest over a company's assets. However, that project documents and/or certain rights or property assets may be subject to prior authorisation for transfer purposes and/or may not be granted as security (e.g. land use rights). Thus, securities to be granted shall be analysed on a case-by-case basis.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

No. If the company is incorporated under the Mozambican Law, this is the Law that shall be applied.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

No.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

As a preliminary note, even though an entity such as a security trustee is not expressly provided for in the law, powers may be granted for someone to act as security agent/trustee by means of a Power of Attorney (“PoA”).

Although, in principle, the transfer of lenders’ interests in credit facilities may be possible, certain consents or authorisations may be required considering each particular case, including (i) BoM’s approval or (ii) the Ministry of Finance’s approval.

In fact, certain restrictions may arise (i) in the law, (ii) by way of the Financing Agreements entered into and/or even, in certain circumstances, (iii) the terms and conditions set out in the power production Concession Contract itself. Thus, such transfers shall always be analysed on a case-by-case basis.

(vi) Please indicate the claims that would have priority over the relevant security interests.

In principle, and in certain circumstances, only the State and local authorities would have priority over the relevant security and interests thereunder.

(vii) Is there a public security registry?

In Mozambique, there is no central registry comprising information on security documents or other alike. The Commercial Code makes reference to a mandatory book of charges and encumbrances but in practice virtually no company in Mozambique has such a book. Nevertheless, depending on the type of security placed and the relevant asset/right upon which same is granted the registration with the relevant Registry Office is mandatory (e.g. securities granted over immovable property shall be registered with the Real Estate Registry Office and securities placed upon company’s shares shall be registered with the Legal Entities Registry Office).

(viii) Formalities in respect of security creation:

(A) Statutory perfection requirements;

The expatriation of monies and interest in connection with security interest in case the payee is a non-resident entity has to be approved by the Ministry of Finance and registered with BoM. The documentation to be filed with the exchange authorities typically comprises a copy of the relevant agreement and relevant security which are subject to previous approval. Moreover, and despite the above prior authorization is obtained, the permission to expatriate interest must be requested each time such payment is to be made.

(B) Any other formalities.

The law sets out specific formalities for each type of security depending on the relevant asset/right upon which same is granted. As a rule, (i) shareholder approval, (ii) notary deed, (iii) registration in the share registry book, with the Legal Entities Registry Office and/or with other relevant Registry Offices, if applicable, are required.

(C) Steps for perfection and length of time taken

Bearing in mind our response above, the steps required so as to perfect securities and/or register same with the relevant Registry Office shall also depend on the specific asset/right upon wich the security is granted. As a general rule, an application to the relevant Registry Office is required and a registration fee is due.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

Yes. As previously mentioned, the law sets out specific formalities for each type of security depending on the relevant asset/right upon which same is granted. Nevertheless, as a rule, amongst others, notarial fees, registration fees and stamp duty shall apply.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

There is no central registry, meaning that one would have to this information on a court-by-court basis upon request of the interested parties. This said, insolvency proceedings need to be registered with the Legal entities Registry and therefore a search with such Registry should provide information on the insolvency status of the company.

(ii) Summary of the different options for an insolvency related process.

Pursuant to the Civil Procedure Code, a company that is unable to fulfill its commercial obligations is deemed bankrupt. The bankruptcy status must be declared by a court. Bankruptcy proceedings may be initiated by the company itself, by its creditors or by the Attorney-General Office.

Preventive Measures

Prior to filing for bankruptcy, it is possible for the company to apply to the court having jurisdiction to convene its creditors so as to try recover from its financial distress situation. Such application must detail the causes for the bankruptcy condition, the payments cease date (if already applicable) and enclose documentary evidence of any factual circumstances claimed and on the existing creditors.

The judge shall issue an initial order appointing an administrator (and one or more creditors) to assist and monitor the action of the company’s management in the running of its business and in the administration of its assets and  set a date, time and place for a credits verification meeting. The main consequence of the order is the stay or suspension of most ongoing enforcement proceedings against the applicant.

After recognition of the credits, a creditors’ final assembly will be held, in which the creditors may agree on a composition – which may consist of a simple moratorium on the payment of the non-preferential credits or involve a reduction of the credits value.

Where a composition is not put forward by the applicant or any creditor or if a composition is proposed but is not approved by the creditors, the creditors have a further mechanism to avoid bankruptcy: subject to the favourable vote of a 75% majority of creditors, the creditors may decide to incorporate a new company to hold the assets of the company which do not secure any preferred credits. The preferred creditors will thus be paid and the other creditors will become quotaholders of the new company. If the quotaholders wish to acquire goods securing other credits, same shall pay the corresponding credit or guarantee its payment on maturity.

If the foregoing preventive / recovery measures fail – i.e., the creditors fail to agree on a composition with the debtor or on the incorporation of a new company or if these measures are rejected by the court –, the debtor will be declared bankrupt.

Declaration of Bankruptcy

The bankruptcy petition may be filed by the company itself, any creditor and/or the Attorney-General Office. There are several circumstances allowing a creditor to apply for a debtor’s bankruptcy, most importantly a cease of payments. The creditor’s petition shall lay its grounds and justify the existence of the relevant credit, and shall enclose all the evidence on which the creditor is to rely.

A court hearing shall then be held – with or without the presence of the bankrupt – and a bankruptcy judgment will be rendered if one of the grounds for bankruptcy is proved. The judgment will include the appointment of an administrator and shall set a deadline of between 30 and 90 days for creditors to file their claims, being subject to specific publication requirements. The judgement is subject to appeal and/or challenge. Once the court declares the company bankrupt, the company is barred from administering and disposing of its assets. In addition, all ongoing enforcement proceedings against the debtor are suspended or stayed.

Suspension of Bankruptcy Proceedings

After the completion of the liabilities verification process, it is nevertheless possible for the proceedings to be suspended. This may happen if (i) the bankrupt or its representatives put forward a creditors' composition, and (ii) the creditors or the bankruptcy administrator request the court to convene a creditors’ assembly to decide on the merits of such a composition or on the incorporation of a new company. These measures are very similar to those of a preventive nature available prior to filing for bankruptcy.

Liquidation and Payment

At a final stage, after the liabilities verification process is concluded and all liabilities have been determined, all assets and rights included in the bankrupt’s estate are then sold. Subsequently, subject to payment of certain specific expenses and credits which enjoy a special privilege, the proceeds of the sale of mortgaged or pledged assets will be forthwith allocated to settle the claims of the corresponding creditors. If such creditors’ claims are not fully satisfied, those creditors will then join the others as ordinary creditors for the unpaid balance of their claims. Despite the foregoing, 25% of the proceeds of sale of mortgaged or pledged assets will remain in deposit with court as security for the payment of court costs and additional expenses to be assessed at the end of the proceedings.

(iii) Are summary or expedited proceedings available?

No.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

(B) the enforcement of a security interest in other assets; or

(C) the enforcement of a guarantee (sovereign or otherwise)?

As a rule, the enforcement of either security interest or guarantees does not require Governmental consent.

Nevertheless, the transfer of certain assets and/or rights may require prior authorisation (e.g. the Concession License cannot be either pledged or transferred without prior Governmental consent). Moreover, where values resulting from the enforcement of securities are to be transferred abroad BoM’s authorisation is also required for forex purposes.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

As a rule, any entity that causes damages to the environment as a result of its conduct and/or activity is liable towards third parties. The obligation to repair arises from the environmental risk inherent to the activity developed by same. The Environment Law sets forth a strict liability regime while everyone who causes damages to the environment as a result of its conduct shall be under the obligation to repair such damages and/or pay compensation regardless of fault. Thus, the company would be deemed liable for environmental damages, even when faultless, should there be an action or inaction on the part of the company which caused same. 

The law does not provide a straight answer as regards liability for historic environmental issues. Thus, it shall be assessed on a case-by-case basis. Nevertheless, in principle, the lenders themselves would not be deemed liable for environmental damages but rather the company in which they hold shares upon enforcement.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Yes, it is required to appoint a court to carry out the enforcement which may than be performed either by private sale or public auction as the court deem fit or as otherwise provided by the law.

 

 

Niger

(a) Overview of security regime

(i) Nature of security: can a security interest be obtained over a company’s assets, e.g.:

(A) Accounts receivable (book debts); pledge

(B) Inventory (stock in trade); pledge

(C) Shares of a company (issued and authorised); pledge

(D) Equipment; pledge

(E) Real property; mortgage

(F) Insurances; pledge

(G) Project contracts.  Pledge

(ii) Shares: can shares of a project company validly be pledged and enforced under an English law share charge?

Shares of commercial company are validly pledged and enforced under the act uniform on security.

(iii) Debt obligations: can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

A Company can grant a security interest in order to secure its obligations.

(iv) Revolving credit facility: if the borrowings to be secured are under a revolving credit facility, are there any special priorities or other concerns?

There are no special laws or regulation relating to a revolving credit facility.

(v) Security agent/trustee: can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time under a credit facility agreement, where the identity of the lenders may change from time to time because of transfers (effected either by assignment or novation) by certain lenders of their interests in the credit facility? Are any steps required to ensure that a transferee of a lender will receive the benefit of the relevant security interests?

The concept of security trustee is not provided by the act uniform on security.

(vi) Preferred creditors: please indicate the claims that would have priority over the relevant security interests.

(A) The rank following the liquidation of the immovable property is as follow

  • Costs of the court and legal process
  • Unpaid salaries
  • Mortgages
  • General privileges subject to publicity
  • General privileges not subject to publicity
  • Unsecured creditors with enforceable title

(B) The rank following the liquidation of the movable property is as follow

  • Costs of the court and legal process
  • Expenses incurred to hold the assets of the debtor
  • Unpaid salary
  • Pledges
  • Other privileges subject to publicity
  • Special privileges
  • General privileges not subject to publicity
  • Unsecured creditors with enforceable title

(vii) Public registry: please confirm if there is a public registry that can be searched to confirm whether a project company has any security documents or any document dealing with any finance arrangement in place, such as guarantees, indemnities or surety ships given by or for the benefit of a project company.

The register of trade and credit can be consulted to confirm whether a project company has any security interests registered against it.

(viii) Formalities: in connection with the creation of a security interest in shares or other assets.

(A) Are any governmental or other consents or filings (consider exchange control and similar regulations, perfection, etc.) required;

Security interest must be made by deed or by private act duly recorded. This act is effective only if it is registered at the register of trade and credit.

A pledge must, on pain of being void, contain the particulars set out by the article 70 of the uniform act.

(B) Are any other formalities (for example, notice to creditors, shareholder approvals, notarisations, etc.) required; and

Pledging of shares is not possible without the approval of the majority of shareholders, representing the 75% +1 of the issued share capital.

(C) What steps are required to register or otherwise perfect security in the jurisdiction and how long do these steps typically take?

See above at (A)

Provisional registration and enrolment must be taken immediately, following the decision authorizing the pledge.

Registration protects the rights of the creditor for 5 years, after which a renewal must be done.

Notice of the pledge must be delivered to the company.

(D) Are there any significant financial costs (including stamp tax, registration, notarial fees, etc.) or significant time delays which would be required in order to create and perfect the relevant security interest?

The notary fees are significant but negotiable. Registration fees are ad valorem.

(b) Insolvency and enforcement regime

(i) Public register: is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

Yes at the register of trade and credit.

(ii) Insolvency process: please provide a summary of the different options for an insolvency related process.

Insolvency processes are set out in the act uniform of OHADA on the organization of simplified procedures for debt recovery.

In brief, 8 days after an unsuccessful payment order, the creditor may proceed with the seizure of the secured assets. Seizure must be notified to the debtor within 8 days. A minute is then drafted. One month from the service of the minute on the debtor, a forced sale may be initiated if the goods have not been sold privately before then.

(iii) Expedited proceedings: are summary or expedited proceedings available based on the existence of a note, perhaps governed by the laws of the jurisdiction, or is there any other documentation or are there any steps that could be taken to gain the availability of expedited proceedings (or other priority) in the jurisdiction?

There is no special article providing the expedited proceedings.

(iv) Governmental or other consents: are any governmental or other consent (consider exchange control and similar regulations) required in connection with:

(A) The enforcement of a security interest in shares;

Formalities are set up on the Uniform Act of OHADA related to the procedures of debt recovery.

(B) The enforcement of a security interest in other assets; or

Formalities are set up on the Uniform Act of OHADA related to the procedures of debt recovery.

(C) The enforcement of a guarantee (sovereign or otherwise)?

Formalities are set up on the Uniform Act of OHADA related to the procedures of debt recovery.

(v) Environmental liabilities: do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Lenders inherit all environmental liabilities when they become owner of the shares.

(vi) Enforcement of security: can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

The uniform act on organization of simplified procedures for debt recovery lists the steps to follow when enforcing security.

Nigeria

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

The liabilities of a company may be secured against its book debts, inventory, company shares, equipment, insurance and over the rights and receivables of a project company under any contract by pledges, charges, liens etc. Security could be by way of legal or equitable mortgages, fixed and floating equitable charges are available over the present and future assets of a project company. A security interest taken over the assets of a project company is required to be stamped at the Stamp Duties Office and registered in the project company's corporate file at the CAC.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

Under CAMA, the shares of a company are transferable property of the company and a charge or security may be created by the company over its property, including such shares. Therefore nothing prevents a company from creating a valid and enforceable charge over its shares.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Under CAMA, a company may grant a security interest in order to secure its obligations as a borrower under a loan agreement or as a guarantor.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

Borrowers may draw down and repay loan amounts intermittently throughout the term of a loan facility.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

Nigerian laws recognize the concept of a security trustee, appointed under a security trust deed to hold any security in trust for a syndicate of lenders, in which the composition of the lenders can change by transfers, assignments or novation.

(vi) Please indicate the claims that would have priority over the relevant security interests.

Under CAMA, creditors are prioritized by the registration of any security in their favour and secured creditors have priority over unsecured creditors.

Secured creditors would have priority over unsecured creditors. Further, a fixed charge would have priority over a previous or subsequent floating charge. Where a charge is created over an asset which is already subject to a similar (i.e legal or equitable) charge, the prior charge will have priority if the subsequent creditor had prior knowledge of the charge over the asset. Further, a legal mortgage would, at all times, take priority over an equitable mortgage.

Upon the winding up of a company, the payment of any accrued wages of employees of the company is to take priority over the settlement of all creditors of the company, (secured and unsecured).

(vii) Is there a public security registry?

The CAC maintains a Register of Charges which contains the details of any charge created over the assets of a company registered in Nigeria. Every company is required to notify the CAC of the creation of any such charge over its assets within 90 days of such security being created. The register may be viewed by any interested person on the payment of requisite search fees. Further, where the security involves land, the same is also required to be registered at the Land or Titles Registry in the area where the subject land is located.

There is however no register or other records for unsecured guarantees, indemnities or suretyships given by a company without any attaching fixed or floating property.

(viii) Formalities in respect of security creation:

(A) Statutory perfection requirements;

Securities created over any assets of a project company would be stamped at the Stamp Duties Office and the stamp duty must be paid within 30 days after a security document is first executed, or after it has been first received in Nigeria if it was first executed at any place outside Nigeria. The security must thereafter be registered in such company's corporate records at the CAC within 90 days and a registration fee of 1% paid. Further, where the security involves the transfer of interest in land in an urban area, the consent of the Governor of the State in which the land is located is required to be obtained.

(B) Any other formalities

CAMA permits the directors of a company to exercise the borrowing powers of the company, subject to any borrowing limit prescribed in the Articles of association of the company. Where such a limit is provided, the directors may not borrow beyond the limit without the approval of the shareholders. Any credit obtained is subject to the formalities set out in (vii) (A) above.

(C) Steps for perfection and length of time taken

Any security created in respect of the assets of a company is required to be entered in the company's register of charges with the CAC and the relevant instruments stamped by the Federal Inland Revenue Service. Further, the company is required by CAMA to maintain a register of debenture holders. Where the security involves a transfer of an interest in land, the consent of the Governor of the state in which the land is located is also required to be obtained prior to such transfer.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

Securities created over any assets of a project company would be stamped at the Stamp Duties Office and the stamp duty (0.75% of the secured sum) must be paid within 30 days after a security document is first executed, or after it has been first received in Nigeria if it was first executed at any place outside Nigeria.

The security must thereafter be registered in such company's corporate records at the CAC within 90 days and a registration fee of 1% paid. The stamping and registration of the security document could be concluded in less than two weeks.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

The registry of the High Court may be searched for the purposes of discovering any pending or concluded insolvency proceedings in respect of any company.

(ii) Summary of the different options for an insolvency related process

The following options are open to an insolvent company:

(A) an arrangement or compromise with its creditors to accepts less for the full liquidation of their creditor interest; or to accept shares in the company in partial or full settlement of their interests; or

(B) an arrangement or compromise with its shareholders to give up a proportion of their ordinary shares or dividends for the benefit of the creditors of the company;

(C) sale of all its assets of the company and go into voluntary liquidation of the company; or

(D) merger with or be acquired by another company; or

(E) winding-up.

(iii) Are summary or expedited proceedings available?

A company may apply to the court for accelerated hearings under the relevant rules of Nigerian Courts of Record.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

(I) Generally, CAMA does not require the consent of any Governmental authority to effect any enforcement of security in the shares of a company. However, the articles of association of the company may provide for some restrictions to the transfer of the shares of the company.

(II) Where the enforcement of the security would involve a merger or takeover of the company, the approval of the Securities and Exchange Commission would be required. This would however not be required where the shares are to be acquired by the creditor as realisation of its credit facility to a private company.

(III) Further, the transfer of interest in shares arising from the enforcement of any security interest in shares would require the filing with the CAC of the relevant instrument of transfer and the consequent amendment of the company's corporate records with the CAC to reflect the current shareholding.

(IV) Specifically, a power generation, distribution or trading company to which a license has been granted by NERC will require the consent of NERC before the security of interest in its shares may be realised.

(B) the enforcement of a security interest in other assets; or

There are no consents required for the enforcement of security interests in other assets of the company. Depending on the terms of the security interest, the security becomes enforceable immediately the debt falls due.

(C) the enforcement of a guarantee (sovereign or otherwise)?

The same conditions apply as in the enforcement of security interest in other assets of the company as stated above.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Subject to the concept of lifting the corporate veil, the project company, as a separate legal entity, is responsible for its liabilities at any time; thus a change in the owners of the company will not shift this liability.

There are however certain provisions of the law which stipulate that where a company is liable for fraud or any other other crime, the officers/directors of the company at the time of the crime shall be jointly or solely liable and may be proceeded against personally.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

A secured creditor can effect the enforcement of the security by both private sale and public auction, subject to the exercise of the right of sale in good faith. Unless upon the order of a court of competent jurisdiction, or where the enforcement involves the liquidation or winding up of the company, it is not required that a liquidator or receiver be appointed to effect the enforcement.

South Africa

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts);
(B) inventory (stock in trade);
(C) shares of a company (issued and authorised);
(D) equipment;
(E) real property;
(F) insurances; and
(G) project contracts.

The nature of the security depends on the nature of the underlying asset. Movable tangible assets are subject to notarial bonds, shares are pledged, immovable property is subject to mortgage bonds and intangible rights are subject to security cessions.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

The shares of a project company cannot be validly pledged and enforced under an English law share charge. Any security taken over shares would have to be a South African share pledge.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

A company can grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility, provided such security is not granted in respect of the acquisition of an shareholding in that company or its holding or sister company and provided that Excon's approval will be required if that security is being provided in respect of the obligations of a non-South African borrower.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

If the borrowings to be secured are under a revolving credit facility, there are no special priority or other concerns.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

As stated previously in this document, certain issues under South African laws governing various types of security prevent an agent from holding security on behalf of a principal. All of these issues mean that it is usual for a special purpose company to be established that has the function of holding the security as a principal and not an agent. This SPC grants the lenders a guarantee on the basis of a counter-guarantee or indemnity from the borrower entity, which counter-guarantee or indemnity forms the causa for security. This guarantee can be given to a class of lenders and not specifically named lenders, which allows the lenders to be changed from time to time. As the incoming lenders need to accept the benefits of the various rights granted to them and become party to the finance documents, it is usual that procedures are put in place to enable these lenders to accept the rights granted to them and become party to the various finance documents. Unless the new lenders become parties to the finance documents, they will not get the benefit of the security.

(vi) Please indicate the claims that would have priority over the relevant security interests.

The South African Revenue Service, employees of the insolvent entity secured creditors with real security (such as pledges of movables and quasi-pledges of intangibles, mortgage bonds and special notarial bonds) and preferred creditors (holders of notarial bonds and conditional cessions) will rank ahead of the concurrent creditors. No creditor will rank ahead of a secured creditor in respect of the asset over which the secured creditor has security, and preferred creditors will rank ahead of the other creditors in respect of the asset over which they have security, if the asset is still in the possession of the borrower at the time of insolvency.

(vii) Is there a public security registry?

There is no public registry that can be searched to confirm whether a project company has any security documents or any document dealing with any finance arrangement in place, such as guarantees, indemnities or suretyships given by or for the benefit of a project company. The only security documents that have to be registered in a public registry that can be searched are mortgage and notarial bonds, which are registered at the Deeds Office.

(viii) Formalities in respect of security creation:

In connection with the creation of a security interest in shares or other assets:

(A) Statutory perfection requirements;

No governmental or other consents or filings are required, unless the security is being given in respect of a loan from a foreign lender, in which case the consent of Excon is required;

(B) Any other formalities.

No formalities (for example, notice to creditors, shareholder approvals, notarisations, etc.) are required other than in respect of mortgage and notarial bonds which have to be undertaken by a registered conveyancer and notary (respectively). Notice to the creditors of the security taken by a lender may be advisable in certain circumstances, but this needs to be considered on a case by case basis as it might not be desirable in the particular circumstances of a company. If a company is giving security over a major part of its assets, then the consent of the shareholders in the form of a special resolution will be required.

(C) Steps for perfection and length of time taken

Notarial and mortgage bonds are registered at the Deeds Office. This is a relatively quick process, taking some weeks, if the documents are correctly prepared and lodged. Share pledges are not registered and are perfected by the pledgee taking possession of the share certificates issued in respect of the relevant shares. Other forms of security can only be perfected once the asset over which security is taken or the evidence in respect of an intangible asset (such as a document in respect of a right) is in the possession of the security holder. In respect of mortgage and notarial bonds, as detailed previously in this document, that can only be after obtaining a court order and having that enforced by the sheriff of the high court. In respect of other security, there is no need to obtain a court order first and possession can be taken without involving the sheriff of the high court but then fair value must either be given by the security holder to the borrower for that asset or the security holder must sell that asset for fair value.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

There are not significant financial costs ( or significant time delays) which would be required in order to create and perfect security interests, other than mortgage and notarial bonds. There can be significant costs to the creation and perfect of mortgage and notarial bonds and there can be time delays in respect of the registration of such bonds.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

There is no court or similar register that can be searched in respect of proceedings and insolvency actions.

(ii) Summary of the different options for an insolvency related process.

The different options for an insolvency related process are complex and detailed. There are several manners of proceeding in respect of an insolvent company. If it is possible that the company could be managed out of its insolvent circumstances, a judicial manager can be appointed to undertake such management. It is also possible for a company to enter into a scheme of compromise with its creditors where it agrees and undertakes to pay each of its creditors a specified number of cents in the Rand, in discharge of its debts. Finally, there is liquidation, in which one or 2 liquidators are appointed to liquidate the assets of the company and finally wind it up. The judicial manager and the liquidators are granted wide powers and whilst appointed to a company, they have full control over that company. They are not controlled by any one creditor or even a body of creditors, and they do not answer to any one creditor or group of creditors. Whilst the creditors have certain rights in respect of voting at creditors meetings and can nominate appointees to the roles of judicial manager and liquidator, the Master of High Court decides who will be appointed to those roles. There is no concept akin to the English law concept of a receiver. Before placing a company into judicial management, a scheme of compromise or liquidation, it is advisable to explore all other options.

(iii) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

Other than the consent of Excon will be required in respect of the export of the capital realised outside of South Africa.

(B) the enforcement of a security interest in other assets

Other than the consent of Excon will be required in respect of the export of the capital realised outside of South Africa.or

(C) the enforcement of a guarantee (sovereign or otherwise)?

Other than the consent of Excon will be required in respect of the export of the capital realised outside of South Africa.

(iv) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

It is possible that the lenders will inherit all environmental liabilities when they become owner of the shares upon enforcement, as the National Environmental Management Act has provisions that look through the polluting entity to those persons who have derived a benefit as a result of the pollution. These provisions are operative at all times and it is arguable that lenders are exposed to environmental liabilities at all times. In the past, the Department of Environmental Affairs and Tourism (as it then was) considered prosecuting lenders for the environmental breaches committed by their borrowers.
(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Security interests taken in the form of security cessions and pledges be realised by both private sale and public auction. Security interests in the form of mortgage and notarial bonds are realised by way of public auction conducted by the sheriff of the high court and it is necessary that the enforcement of such interests is carried out by the sheriff of the high court.

Tanzania

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

A wide universal security interest is available (over book debts, inventory, company shares, equipment, insurances and project contracts). Mortgages over land, fixed and floating charges over other assets present and future, as well as assignments by way of security over contracts, are available over personal and real property. Trusts and the concept of insolvency are recognised but not tried and tested in the courts in relation to security enforcement.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

A charge may be granted over shares in a company as security for a loan.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Security may be granted over receivables.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

Borrowers may draw down and repay amounts for short periods throughout the term of a loan facility if those are the contractual terms of the loan agreement.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

The concept of trust is recognised in Tanzania and the applicable laws are generally and initially drawn from English law.

(vi) Please indicate the claims that would have priority over the relevant security interests.

Certain creditors such as the tax authority and employees up to certain levels are preferential creditors and are given priority over floating charge secured and unsecured creditors on winding up.

(vii) Is there a public security registry?

The BRELA maintains a public register where information about security interests is recorded and can be searched.

A form must be registered with BRELA in respect of certain security interests within 42 days of their creation in order to perfect the security interest and to ensure it is not void as against another creditor or a liquidator.

(viii) Formalities in respect of security creation:

There are certain formalities that must be observed depending on the nature of the security being granted (and the asset class). Formalities also apply in order to perfect security interests, such as registration with BRELA (see above).

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

A search can be carried out at BRELA to check if a company is in the process of liquidation.

(ii) Summary of the different options for an insolvency related process.

The Companies Act 2002 ("CA") sets out the insolvency regime for companies in Tanzania. The procedures for insolvency include:

(A) Liquidation

(I) Compulsory liquidation or winding up (or winding up by the court), a shareholder, unpaid creditor, the company itself, the Official Receiver, the Attorney General or an administrator of the company presents a petition to wind up the company on one of the grounds specified in the CA. These grounds include that it is just and equitable;

(II) Voluntary liquidation or winding up

a. Members' (solvent) voluntary liquidation or winding up, if the company is solvent and the shareholders agree to close it down;

b. Creditors' voluntary liquidation or winding up, to wind up an insolvent Tanzanian company where the company is not capable of being rescued, to prevent further deterioration of its assets and proliferation of its liabilities and to ensure a fair distribution among creditors.

(B) Receivership

(I) "Limited" receiver appointed out of court by the holder of a mortgage or charge over the assets of the company;

(II) Administrative receiver appointed out of court by the holder of a floating charge over the whole or substantially the whole of the assets of the company under a floating charge; and

(III) "Limited" receiver or administrative receiver appointed by the court in certain circumstances.

(C) Administration where a company may be rescued or reorganised or its assets realised under the protection of a statutory freeze on the enforcement rights of creditors;

(D) Company voluntary arrangement, to seek the approval and implementation of a rescue or optimum salvage scheme by the directors or administrator or liquidator as applicable; and

(E) Scheme of arrangement, to freeze operation of the company during administration, liquidation or administrative receivership.

(iii) Are summary or expedited proceedings available?

There are no specific procedures for expedited proceedings.

(iv) Are any governmental or other consents required in connection with:

There are no specific governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

(B) the enforcement of a security interest in other assets; or

(C) the enforcement of a guarantee (sovereign or otherwise).

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Lenders may assume environmental liabilities if they enforce security and acquire the shares and assets. A failure to comply with environmental laws may lead to closure of the plant.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

A security interest under a valid security agreement is enforceable in accordance with its terms and the secured party may apply for sale of the security interest subject to those terms. If the proceeds of sale are not enough, the secured party will have a continuing claim against the company of the balance, although not secured if there is no remaining security.

Uganda

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

Security interests may be registered over a wide range of company assets including book debts, inventory, land , fixtures/immovable assets, moveable assets, income streams, equipment, insurances, shares in the project company, local bank accounts, contract rights, intellectual property rights and other intangible assets

The securities envisaged may take the following forms: Mortgages, Debentures, Share Pledges, Liens on Accounts, Assignments of Receivables, Assignments, Chattels Mortgages, and Deeds of Hypothecation.

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

A charge may be granted over shares in company as security for a loan.

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

There is no provision under the Companies Act that bars a company from granting a security interest in order to secure its debt obligations as a borrower under a credit facility or as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility. However, such an act must not be prohibited by the Memorandum and Articles of Association of the said company.

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

If the borrowings to be secured are under a revolving credit facility, the same priority considerations arise as would with any other credit facility in the event of insolvency under Common Law.

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

A security agent may be appointed by the lenders in respect of a credit facility.

(vi) Please indicate the claims that would have priority over the relevant security interests.

Preferential creditors are only given priority over unsecured creditors. But it is to be noted, that under the Companies Act, Cap 110, where the assets of the company available for the payment of general creditors are insufficient, government taxes, salaries, NSSF contributions would take priority over the claims of holders of debentures under any floating charge created by the company.

(vii) Is there a public security registry?

There is a public Companies registry which may be searched to ascertain whether a project company has any security documents or any document dealing with any financial arrangement in place, such as guarantees, indemnities, debentures or suretyships given by or for the benefit of a project company. There is also a Land Registry, which may be searched to ascertain whether there are any existing mortgages over land owned by a project company.

(viii) Formalities in respect of security creation:

There are periods within which certain securities must be registered and duty paid thereon e.g. a debenture must be registered within 42 days from the date of creation. Filings are done with the Companies Registry for shares, debentures and security over immoveable properties is done at the Lands Registry.

There are no requirements for notice to shareholders etc save as may otherwise be provided in the memorandum and articles of association or a shareholders agreement.

The steps required to perfect security depend on the particular security. All debentures and mortgages must have stamp duty paid thereon before the same are submitted for registration. Registration at the companies and lands registries may take anywhere from 2-60 days.

The most significant costs are stamp duties which range from 0.5-1% of the value of the facility.

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions?

Searches may be conducted at the court premises or on the respective company files at the companies registry.

(ii) Summary of the different options for an insolvency related process.

The Insolvency process in Uganda is governed by the Companies Act, Cap 110. The options available include:

Voluntary winding up: this may be effected by the shareholders or the creditors, where the Company passes a resolution for the company to be wound up and reaches an arrangement with its creditors to have the Company wound up under the supervisions of a jointly appointed liquidator.

Receivership: under this arrangement a secured creditor may apply to Court for the appointment of a receiver to allow for the realisation of company assets subject to security.

Scheme of arrangements/reconstruction: by this procedure, the company may reach a compromise with its creditors to settle their debts without the company being wound up. Such a compromise must be sanctioned by the Court and is binding if the appropriate majorities of each class of creditors/members agree.

(iii) Are summary or expedited proceedings available?

There are no expedited proceedings under the insolvency laws of Uganda.

(iv) Are any governmental or other consents required in connection with:

There is only one insolvency regime in Uganda and it governs all companies incorporated under the Companies Act.

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Lenders will generally assume all liabilities which attach to the property right in a given project, including environmental liabilities, if they enforce security and acquire the property in a given asset.

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

The mode of enforcement of a security interest is dependent on its security agreement in accordance with whose terms it shall be enforced. Except that, in the case of a mortgage, under the Mortgage Act Cap 229, where the mortgage gives express power to the mortgagee to sell without applying to court, such sale shall be by private treaty or public auction.

Zambia

(a) Overview of security regime

(i) Can a security interest be obtained over a company's assets, e.g.:

(A) accounts receivable (book debts); - Yes
(B) inventory (stock in trade); - Yes
(C) shares of a company (issued and authorised); - Yes
(D) equipment; - Yes
(E) real property; - Yes
(F) insurances; and - Yes
(G) project contracts. - Yes

(ii) Can shares of a project company validly be pledged and enforced under an English law share charge?

Yes

(iii) Can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?

Yes

(iv) If the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?

Priority will be accorded by registration of the security

(v) Can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time?

Yes

(vi) Please indicate the claims that would have priority over the relevant security interests.

The payment to preferential creditors in priority in event of liquidation or the appointment of a receiver under a floating charge as provided by s.346 of the Companies Act is as follows:

(A) Liquidation costs: the costs and expenses of the winding-up or receivership and the remuneration of the liquidator or receiver;

(B) All amounts due:

  • by way of wages or salary accruing to any employee within the period of three months before the commencement of the winding-up or receivership;
  • leave pay accruing to any employee within the period of two years before the commencement of the winding-up or receivership;
  • any paid absence (not being leave) accruing to any employee within the period of three months before the commencement of the winding-up or receivership;
  • recruitment expenses or other amounts reimbursable under any contract of employment;
  • an amount equal to three months' wages or salary, by way of severance pay, to each employee;
  • all amounts due in respect of workers' compensation under any written law relating to workers' compensation accrued before the commencement of the winding-up or receivership;
  • any tax, duty or rate payable by the company in respect of any period prior to the commencement of the winding-up or receivership, whether or not payment has become due after that date;
  • all Government rents not more than five years in arrears at the commencement of the winding-up; and
  • all rates from the company to a local authority having become due and payable within the period of three years before the date of commencement of the winding-up.

(vii) Is there a public security registry?

There is a Companies Registry and a Lands and Deeds Registry

(viii) Formalities in respect of security creation:

(A) Statutory perfection requirements;

The security documents must be registered with the relevant Public Registry for them to be legally enforceable and for purposes of priority.

(B) Any other formalities.

Under the Authentication of Documents Act Chapter 75 of the laws of Zambia ("Authentication Act") before a document signed outside of Zambia can be used in Zambia it must be "authenticated" in accordance with the Authentication Act.

(C) Steps for perfection and length of time taken

Apply for registration with either the Companies Registry or the Lands Registry must be made and filed together with the necessary fees. Registration will take between one to two weeks.

(D) Any significant financial costs or significant time delays required to create and perfect the relevant security interest?

No

(b) Insolvency and enforcement regime

(i) Is there a court or similar register that can be searched in respect of proceedings and insolvency actions ?

The Principle or Commercial Registry of the High Court of Zambia

(ii) Summary of the different options for an insolvency related process.

(A) Voluntary winding up(creditors)- this is a winding up of a company at the instance of the companies creditors

(B) Voluntary winding up(members)- this is a type of winding up of a company at the instance of the members of the company

(C) Involuntary winding up- this is a winding up of a company by the Court.

(D) Receivership- this is a remedy for a secured creditor to allow for the realisation of company assets subject to security

(E) Composition or Scheme of arrangement- this is a Court sanctioned procedure where a compromise or other arrangement with creditors or members is made, which is binding if the appropriate majorities of each class of creditors/members agree

(iii) Are summary or expedited proceedings available?

There are no expedited proceedings available. However, the judiciary has a Commercial registry which was designed to be a fast track court to deal only with matters of a commercial nature.

(iv) Are any governmental or other consents required in connection with:

(A) the enforcement of a security interest in shares;

No

(B) the enforcement of a security interest in other assets; or

No

(C) the enforcement of a guarantee (sovereign or otherwise)?

No. The State Proceedings Act provides that you cannot execute against the State

(v) Do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?

Yes

(vi) Can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?

Security interest can be enforced both publicly and privately. A company can appoint a person of its choice to carry out the enforcement. It is not necessary to appoint a Court receiver.

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