n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - Two decades of special notarial bonds in terms of the Security by Means of Movable Property Act




It has been just over two decades since the Security by Means of Movable Property Act 57 of 1993 (SMPA) came into operation on 7 May 1993.1 For someone who knows little about its historical context and field of application, the Act's title might create the impression that it is a comprehensive piece of legislation that is at the pinnacle of the South African legal regime regarding the use of movable property as objects of credit security. However, the Act only deals with a specific real security right, namely a pledge that vests in favour of the creditor if the notarial bond is registered in compliance with the requirements of the SMPA. The bond must be registered in accordance with the Deeds Registries Act 47 of 1937 and the object of security must be 'specified and described in the bond in a manner which renders it readily recognizable'. Unlike the traditional common-law pledge, the special notarial bond requires no delivery of the hypothecated movable in order to constitute a real right in favour of the creditor. Instead, the creation of a right of pledge is deemed to be as effective as if there had been valid delivery, notwithstanding that there was none.


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