The system governing transactions regarding movable property not only increases risk for financial institutions but also deters Foreign Direct Investment (FDI). It also impedes access to financing for small and medium-sized businesses.
This was recently pointed out by Attorney General and Minister of Legal Affairs, Basil Williams at a workshop on the Moveable Property Bill.
The Minister said that updated legislation is needed to address the current issues within the system.
In this regard, Williams said that the laws governing secured transactions in movable property in Guyana are scattered amongst a dozen or more statutes, some of which have long been forgotten and have fallen into disuse.
In some, but not all instances, Williams said that secured transactions are publicized in the Gazette and registered in the Commercial Registry. He noted however that the registration process is manual and in some cases, a combination of manual and electronic. He stressed that this creates delays and uncertainty and increases the possibility of error.
Further to this, the Attorney General said that the laws governing secured transactions rely on complex legal and equitable rules for determining priority amongst claimants competing for the same asset when a debtor defaults. The Legal Affairs Minister commented that these rules increase uncertainty for lenders.
Additionally, Williams said that recourse to the Courts for enforcement, even for collateral of small value, clogs up the Courts and causes unnecessary delays, during which time; the collateral depreciates to the detriment of debtor and creditor alike.
Williams also stated that by far, the most numerous secured transactions- hire purchase agreements and finance leases – are not even publicized. He highlighted that receivables have lost their usefulness as collateral, as a result of provisions in the Companies Act.
As for the solution, Williams said that the Moveable Property Security Bill 2018 provides for a comprehensive, integrated framework for secured transactions in movable property. In this framework, he said that all movable property assets qualify as collateral, regardless of item or type.
With a few exceptions, he said that the policies embodied in the Bill are not major policy changes. He said that they have been part of Guyana’s law and practiced for many years, in one form of security device or other.
The Legal Affairs Minister said, “The legislative framework also introduces a modern centralized electronic registry system, in which authorized registrants will have direct access to the registry database, for the purpose of entering their record of a secured transaction. The record will be immediately searchable. The system, which will be built on a newly designed platform for company records, will operate in real time.”
He added that the proposed legal and institutional framework will provide Guyana with the Caribbean’s most modern legislation dealing with secured transactions. Together with the newly introduced Credit Information system and legislation; Williams said that risk assessment, management, and mitigation for lenders will be enhanced.
