SOUTH AFRICA Law and Practice Contributed by: Ulrike Naumann, Alison Mellon, Joshua Janks and Aneria Bouwer, Bowmans
General Notarial Bond The DRA does not prescribe a form for a general notarial bond. The bond must, however, be in writing and prepared by a notary public. It must be executed either: • by the owner of the movable property subject to the bond; or • by a notary public under a formal power of attorney granted to them by the mortgagor. Typically, a bond contains both: • an acknowledgement of debt by the borrower for the amount of the bond; and • a declaration binding the borrower’s movable property in favour of the lender as security for the debt acknowledged. A general notarial bond must be registered at the deeds registry within three months after the date of its execution. Failure to do so will result in application of the hardening period – ie, in the event of insolvency arising within six months of the date of when the bond was lodged for reg- istration, it will not confer any security. Special Notarial Bond A special notarial bond for tangible movable property must identify and describe the prop- erty secured in a manner which makes it readily recognisable. The DRA does not prescribe a par- ticular form for this bond. It must be registered as prescribed in the DRA and registered at the deeds registry within three months after the date of its execution. Failure to do so will be met with the hardening period. Aircraft The Director of Civil Aviation will record a mort- gage over an aircraft on the completion of the prescribed form, production of a deed of mort-
gage and payment of the prescribed fee. The mortgage is recorded in the register kept by the Director of Civil Aviation. There are no prescribed formalities for an international interest, which is registered according to international practice. IDERAs are not registered with the Director of Civil Aviation; however, it is common practice to file them together with the deed of mortgage. Ships A deed of mortgage over a ship must be pre- sented to the Registrar of Ships and registered in the South African Ships Register. Cession in security There are no formalities for a cession in secu- rity, which is validly created (and in general, per- fected) once the agreement to cede security has been concluded. Accordingly, it is relatively sim- ple to give security over most intangible movable property such as claims, shares and cash. In the case of financial instruments which are evidenced by certificates, these certificates are delivered with a transfer form to evidence the security and facilitate enforcement, where nec- essary. Delivery is not required to constitute a valid cession. Where financial instruments are uncertificated, notwithstanding that security over these finan- cial instruments can be validly provided pursu- ant to a cession in security (or a pledge, as the case may be), the security is only perfected by recording the existence of the cession in security as an electronic entry in the securities account of the security provider with the financial institu- tion where the financial instrument is registered. In relation to securities which are listed on a stock exchange, the securities account of the borrower is considered flagged in accordance with the Financial Markets Act, 2012. The same
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