SOUTH AFRICA Law and Practice Contributed by: Ulrike Naumann, Alison Mellon, Joshua Janks and Aneria Bouwer, Bowmans
• is created over the tangible movable property (which can be specifically identified) of a bor- rower in favour of a lender as security for a debt or other obligation; and • meets the requirements outlined in the Secu- rity by Means of Movable Property Act, 1993 and is registered under the DRA. The effect of the special notarial bond (once registered) is to constitute real security in the mortgaged property as if it had been expressly pledged and delivered to the lender, despite the absence of actual delivery. Since property sub- ject to a special notarial bond must be specifi- cally identified, it is not appropriate for creating security over changing (fungible) assets (eg, inventories). Title to the relevant tangible mov- able property remains with the borrower but is subject to the lender’s security interest. Landlord’s hypothec If any rental payments in respect of a leased immovable property are due and payable, but unpaid, the lessor of the leased property has a hypothec (an encumbrance giving a creditor a security interest in any movable property of the debtor that is on the leased property), unless the contrary is agreed. The hypothec provides the lessor with a real right of security, permit- ting the lessor to attach and execute the lessee’s property to satisfy payment of the rental arrears. Aircraft Security over an aircraft can only be effected by a deed of mortgage in the prescribed form under the Recognition of Rights in Aircraft Act, 1993, as stipulated in the Mortgaging of Aircraft Regulations, 1997. An international interest in an aircraft can be registered on the International Registry. The Convention on International Interests in Mobile
Equipment 2001 (Cape Town Convention) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Spe- cific to Aircraft Equipment 2001 were promul- gated as law in South Africa by the Convention on International Interests in Mobile Equipment Act, 2007. As a result, an international interest in an aircraft can be enforced by third-party credi- tors where the aircraft is located in South Africa. The South African government has also con- firmed that it will recognise and act on IDERAs ( “irrevocable de-registration and export request authorisations” ), a concept established under the Cape Town Convention. While an IDERA should be sufficient, a practice has developed in South Africa in terms of which the creditor obtains an undated but signed deregistration power of attorney from the debtor. This power of attorney enables the lender to direct the South African Civil Aviation Authority to deregister the aircraft. Ships Security over a South African ship (or a share in a South African ship) can only be created by a mortgage in the format prescribed pursuant to the Ship Registration Act, 1998 and the Ship Security over intangible movable property is usually given by way of a cession in security. It is created by the debtor (cedent) granting security by way of cession over the relevant intangible movable property in the creditor’s (cessionary’s) favour. It can be structured as either: Registration Regulations, 2002. Intangible movable property • a cession in securitatem debiti where title to the property remains with the cedent (similar to a pledge); or
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