SOUTH AFRICA Law and Practice Contributed by: Ulrike Naumann, Alison Mellon, Joshua Janks and Aneria Bouwer, Bowmans
• an out-and-out cession, where title to the property is transferred to the cessionary, subject to the right of the cedent to have the property transferred back to it by the ces- sionary once the debt, or other obligation secured, is discharged. There are several common types of intangible movable property which are provided as security in acquisition finance transactions. Financial instruments Security is often granted over financial instru- ments such as shares and debt securities. This security is typically created by either a pledge or a cession in security (or a combination of these). Claims and receivables Security over claims and receivables is com- monly granted in South Africa. These terms are defined to include book debts and other rights under contracts such as insurance contracts. This security is created by a cession in security. Cash Where security is to be taken over cash, it can also be created by a cession in security of the security provider’s bank account. Intellectual property Under South African law, intellectual property is understood to comprise patents, trade marks (both registered and unregistered), copyright and designs. Security over any intellectual property can generally be taken by a cession in security. However, legislation has provided for a special registration of a security interest over patents, registered trade marks or registered designs called “hypothecation” . In particular, security over patents can be taken by regis- tering a hypothecation under Section 60(5) of the Patents Act, 1978. Security over registered
trade marks can be taken by a hypothecation of trade marks under a deed of security under the Trade Marks Act, 1993. Security over registered designs can be taken by a hypothecation under Section 30(5) of the Designs Act, 1993. Note that in the absence of a registered hypothe- cation, intellectual property can be validly trans- ferred to a third party despite a lender’s security interest. If the hypothecation has been specifi- cally registered against the intellectual proper- ty right, then the proprietor cannot voluntarily license the right to third parties. 5.2 Form Requirements Mortgage Bond A special mortgage of immovable property is created by a mortgage bond. The DRA does not prescribe a form for a mortgage bond; however, the mortgage bond must be in writing. Typically, a mortgage bond contains both: • an acknowledgement of debt by the mort- gagor for the amount of the bond; and • a declaration binding the mortgagor’s mova- ble property in favour of the lender as security for the debt acknowledged. A mortgage bond is perfected by its registra- tion at the same deeds registry office where the immovable property over which the bond is pur- ported to be granted is registered. Pledge A pledge is created by an agreement between the pledgor and the pledgee (which agreement need not be in writing) together with delivery of the pledged movable property to the pledgee (or its agent). Title to the movable property remains with the pledgor, subject to the pledgee’s secu- rity interest. There are no registration or notifica- tion requirements.
404 CHAMBERS.COM
Powered by FlippingBook