ACT, No. 49 OF 2009

49of2009.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
—————————
SECURED TRANSACTIONS
ACT, NO. 49 OF 2009
—————————
[Certified on 25th September, 2009]
Printed on the Order of Government
—————————
Published as a Supplement to Part II of the Gazette of the Democratic
Socialist Republic of Sri Lanka of September 25, 2009
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Secured Transactions Act, No. 49 of 2009 1
[Certified on 25th September, 2009]
L. D.—O. 29/2008.
AN ACT TO PROVIDE FOR THE SECURING OF OBLIGATIONS IN RESPECT OF
MOVABLE PROPERTY, MAINTENANCE OF A SECURED TRANSACTIONS
REGISTER; AND FOR MATTERS CONNECTED THEREWITH OR INCIDENTAL
THERETO.
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows:—
1. This Act may be cited as the Secured Transactions Short title and
Act, No. 49 of 2009 and shall come into operation on such date of
date as the Minister may appoint by Order published in the operation.
Gazette (hereinafter referred to as the “appointed date”).
PART I
APPLICATION OF THE LAW
2. Notwithstanding anything contained in any other Scope of the
law any person who— Act.
(a) pledges, enters into a purchase agreement,
conditional transfer, finance leasing agreement or
mortgage of any movable property, assignment of
accounts or other rights of payment of consignment;
(b) enters into an agreement for sale of accounts and
chattel paper;
(c) enters into a lease agreement in respect of a movable
property for a period exceeding one year;
(d) gives any undertaking in terms of section 2 of the
Inland Trust Receipts Act, No. 14 of 1990; or
(e) gives any undertaking of any consignment of goods
imported into Sri Lanka in terms of section 2 of the
Trusts Receipts Ordinance (Chapter 86),
2 Secured Transactions Act, No. 49 of 2009
may secure such pledge, mortgage or obligation, as is
specified in items (a), (b), (c), (d) or (e) with a collateral in
accordance with the provisions of this Act:
Provided however the application of the provisions of
this Act shall not depend on the ownership of the collateral:
Provided further the period of such obligation shall extend
for a period exceeding one year.
Exemption from 3. The following transactions shall be exempt from the
the application application of the provision of this Act:—
of this Act.
(a) the transfer of a claim for compensation of an
employee;
(b) the sale of accounts or chattel papers arising out of
a part of a sale of a business;
(c) the assignment of accounts or chattel paper
instrumental for the purpose of collection only;
(d) an obligation under a contract to assign the right of
payment to an assignee; and
(e) the transfer of an interest in goods held by the debtor
as equipment or consumer goods, where the goods
are registered under the Motor Traffic Act, No. 8 of
2009, Sri Lanka Ports Authority Act, No. 52 of 1979,
the Merchant Shipping Act, No. 52 of 1971, the
Civil Aviation Authority Act, No. 34 of 2002,
respectively.
Objective. 4. The objective of the Act is to promote the interest of
the national economy and economic activity in accordance
with the provisions of this Act and regulations made
thereunder, by securing a pledge, mortgage or obligation
specified in section 2 of this Act by utilizing collateral
recognized by sections 2 and 3, in the manner specified.
Secured Transactions Act, No. 49 of 2009 3
5. Any mortgagor, pledgor, conditional transferor, lessor Validity of a
or assignor may accept a collateral for securing such secured interest.
mortgage, pledge, conditional transfer, financial lease or
assignment:
Provided however no such person shall accept any secured
interest other than a secured interest in the purchase money
of consumer goods belonging to the debtor:
Provided further such security interest may not be deemed
to be invalid due to the rights enjoyed by the debtor to use,
sell, exchange or otherwise dispose of such security.
6. Any interest in a collateral offered by a debtor to More than one
secure an obligation, may be utilized to secure more than obligation may
be secured by
one obligation. the same
collateral.
PART II
SECURED TRANSACTIONS
7. (1) There shall be maintained a Secured Transactions Maintenance of
Register (hereinafter referred to as the “Register”) which Secured
Transaction
shall for the purposes of this Act be maintained by the Credit
Register.
Information Bureau of Sri Lanka established under the Credit
Information Bureau of Sri Lanka Act, No. 18 of 1990. In
addition to the powers specified in the said Credit
Information Bureau of Sri Lanka Act, the Bureau shall have
the following powers, duties and functions:—
(a) to maintain in the manner as prescribed the Register
of Secured Transactions and the process of
registration of security interest of movables in such
Register;
(b) to register a notice of a security interest in collateral
filed by any person specified in item (a), (b), (c), (d)
and (e) of section 2;
(c) to register a notice of interest of a judgment-
creditor; and
4 Secured Transactions Act, No. 49 of 2009
(d) to maintain records of all expired notices for a
period of ten years from the date of expiry thereof.
(2) The powers, duties and functions in relation to
registration of security interest of movables shall be carried
out by the officers and servants of the Bureau under the
directions of the Board of Directors of the Credit Information
Bureau of Sri Lanka appointed under section 5 of the Credit
Information Bureau of Sri Lanka Act, No. 18 of 1990 :
Provided that in carrying out the powers, duties and
functions in relation to registration of the security interest
of movables such officers and servants shall be subject to
such regulations and rules as may be made from time to time
as provided for under this Act.
Duties of the 8. (1) Each notice filed of record, shall be entered in the
Filing Office. Register maintained in terms of section 7 by the Credit
Information Bureau of Sri Lanka, and shall be—
(i) assigned a unique file number, in all instances where
it is an initial notice;
(ii) assigned a number to every notice (not being the
initial notice);
(iii) used to create a record that bears the number
assigned to the filed record and the date and time of
filing; and
(iv) open for inspection by the public.
(2) The Register shall contain an index of every initial
notice by the name of the debtor and shall index all filed
records relating to an initial notice in a manner that associates
the initial notice.
(3) The Register shall be maintained in such a manner so
as to be able to retrieve a record by the name of the debtor
and by the file number assigned to the initial notice to which
the record relates and other related records.
Secured Transactions Act, No. 49 of 2009 5
(4) The Register shall contain records of lapsed notices
for a period of ten years beyond the date on which it has so
lapsed.
(5) The acceptance or refusal to register a notice shall
not affect the accuracy, authenticity or validity of any
information contained in the notice.
9. (1) The Credit Information Bureau of Sri Lanka may Information
furnish the following information to any person who may from Credit
Information
apply to the office for the same:— Bureau Office of
Sri Lanka.
(i) information regarding the availability of a debt
secured by a collateral in respect of a secured party
and the details of such debtor and the collateral as
at a given date and time;
(ii) information relating to the file number and the date
and time of filing of the notice to which the request
relates;
(iii) information contained in each notice, to which the
request relates.
(2) When forwarding an application for inspection to
the Credit Information Bureau of Sri Lanka, the applicant
shall furnish the following information relating to the
debtor:—
(i) the national identity card number of a debtor who
is a natural person and a citizen of Sri Lanka and in
the case of a body corporate the registered number
applicable thereto;
(ii) the name of the debtor if such debtor is a body
corporate and a citizen of Sri Lanka;
(iii) where available the file number of the notice; and
(iv) the reasons why such information is required.
6 Secured Transactions Act, No. 49 of 2009
(3) The Credit Information Bureau of Sri Lanka may
communicate information in any language:
Provided that, if requested, the Credit Information Bureau
of Sri Lanka shall issue a Certificate containing details of
the information requested in the prescribed form signed by
an officer authorized in that behalf and such certificate shall
be admissible in evidence and shall be prima facie evidence
of the facts stated therein.
All documents 10. (1) Every document entered in the Register shall be
entered in the deemed to be a public document.
Register to be
public
documents. (2) Any person who requires information in respect of a
collateral relating to a secured transaction shall have the
right to inspect and obtain copies of any document filed
with the Credit Information Bureau of Sri Lanka upon the
payment of a prescribed fee.
Contents of 11. (1) Every initial notice shall contain—
initial notice.
(i) the national identity card number of a debtor and
the name of the debtor with a mailing address within
Sri Lanka and in the case of a body corporate the
registration number applicable thereto;
(ii) the national identity card number of the secured
party or an agent authorized by the secured party in
writing and in the case of a body corporate the
registration number applicable thereto and the
mailing address within Sri Lanka of the secured
party or of such agent or of the body corporate;
(iii) a description of the collateral covered by the notice;
and
(iv) any other prescribed information required to assess
the creditworthiness of any person specified in
section 2 of this Act:
Provided however, a notice shall, if such collateral covers
future expectations of fixtures, contain a description of the
relevant movable property.
Secured Transactions Act, No. 49 of 2009 7
(2) A person who secures an obligation with a collateral
shall be entitled to file an initial notice only where the debtor
authorizes the filing of such notice. Such authorization shall
however not form part of the notice.
(3) Any debtor specified in section 2 of this Act shall
authorize the filing of an initial notice covering the collateral
specified in the security agreement and the proceeds, if any,
of the collateral , by signing the agreement which he entered
into irrespective of the period covered by such agreement.
(4) An initial notice may be filed before entering into a
secured transaction.
12. (1) Notwithstanding anything contained in any Name of the
other law, a notice shall be valid and effective if it clearly debtor and
secured party.
provides in the case of—
(i) the debtor being a person, the name and the national
identity card number of such person;
(ii) the debtor being natural person and not a citizen of
Sri Lanka the name of the person as specified on
such person’s passport and the place of issue of the
passport;
(iii) the debtor not being a natural person and is
registered under the Companies Act or otherwise
recognized as a person in terms of any other law of
Sri Lanka, the name of the debtor as specified on
the Register maintained at the Registrar of
Companies or the name recognized under any other
law of Sri Lanka;
(iv) the debtor being a foreigner other than a natural
person, qualified to do business under the
Companies Act, the name of the debtor as specified
8 Secured Transactions Act, No. 49 of 2009
on the Register maintained at the Registrar of
Companies; or
(v) the debtor being a person other than a person
specified in paragraph (iv) of this section, the name
of the debtor as specified on the appropriate registry
in the country where the foreign person is registered.
(2) When a notice provides the name of the debtor
accurately, absence of a trade name or other name of the
debtor shall not make such notice invalid:
Provided that such notice shall be invalid if the notice
fails to specify accurately the name of the debtor.
(3) A person may provide in a notice the names of more
than one debtor and the name of more than one secured
party.
(4) Failure to specify the status of a person as an agent of
a secured party shall not invalidate such notice.
PART III
AMENDMENT, CONTINUATION AND TERMINATION OF THE NOTICE
Effect of 13. (1) Where an obligee waives the requirement of
changes. collateral while its security interest or the obligation remains
in force, the initial notice filed of record shall continue to be
valid and effective, notwithstanding the fact that the
knowledge or consent of the secured party may or may not
have been obtained for such waiver.
(2) Where a notice filed of record becomes misleading
due to change of the name of the debtor, the notice shall be
valid and effective in order to perfect a security interest in
Secured Transactions Act, No. 49 of 2009 9
collateral acquired by a debtor within four months from the
change of name of the debtor:
Provided however such notice shall be valid and effective
to perfect a security interest acquired by the debtor after four
months from the date of change of the name, if such change
is brought to the notice of the Credit Information Bureau of
Sri Lanka within four months from the date of such change.
(3) A notice remains valid and effective after the change
of the name of the debtor unless due to change of
circumstances the notice fails to contain an accurate
description of the details of the debtor.
14. (1) Every notice filed under this Act shall be valid Validity of a
for a period of five years from the date of filing unless the notice.
period of validity is extended by the filing of a continuation
statement.
(2) Upon the expiration of the validity of a notice, the
security interest perfected by such notice shall become
invalid unless the security interest is perfected without the
filing of a notice.
(3) If the security interest becomes invalid upon the
expiration of the validity of such notice it shall be deemed
never to have been perfected against a prior or subsequent
purchaser of a collateral for value.
15. (1) An initial notice may be amended by making Amendment of
one or more amendments. An amendment shall— notice.
(i) identify the initial notice by the unique file number
allocated to such notice;
(ii) specify the name of the secured party on the notice
and the name of the person who authorizes the
amendment;
10 Secured Transactions Act, No. 49 of 2009
(iii) indicate that it is an amendment to the notice; and
(iv) provide all the relevant information required of an
initial notice, in a manner that reflects the amended
state of the notice.
(2) Where an amendment makes an addition to the
collateral covered by a notice, or a debtor to a notice, such
amendment shall be effective if the debtor authorizes in
writing, the filing of such amendment.
(3) Where there is more than one secured party specified
on the notice, the amendment shall be valid if one secured
party authorizes in writing, the filing of such amendment.
(4) An amendment made for the addition of a collateral
to the notice shall be valid with respect to the collateral so
added, only from the date of the filing of such amendment.
(5) An amendment made for the addition of a name of a
debtor to the notice shall be valid with respect to the debtor
so added, only from the date of the filing of the amendment.
(6) Where a secured party specified on the notice
authorizes in writing the filing of an amendment, such an
amendment other than an amendment to add a collateral or
add a debtor shall be valid.
(7) An amendment shall be invalid where it deletes all
names of secured parties without providing a name of a new
secured party, or deletes the name of a debtor and fails to
provide a name of a debtor not previously specified on the
notice.
(8) Where there is more than one secured party on a
notice, each secured party may be required to authorized the
filing of an amendment.
Secured Transactions Act, No. 49 of 2009 11
(9) Subject to the provisions of section 11, the period of
validity of a notice, shall not be extended or deemed to be
extended due to filing of an amendment.
16. (1) The period of validity of a notice may be Continuation of
notice.
extended by filing a continuation statement that—
(i) identifies the initial notice by its unique file
number;
(ii) identifies a secured party on the notice who
authorizes the continuation statement; and
(iii) indicates the extension of the validity of the notice,
with respect to the secured party who authorized
the filing.
(2) A continuation statement may be filed within six
months prior to the expiration of the five year period of the
notice, and upon filing of a continuation statement within
the period specified herein, the validity of the notice shall
continue for a further period of five years commencing from
the date on which the notice would have become invalid.
(3) Upon the expiration of the extended period of five
years as specified in subsection (2), the validity of such
notice shall lapse unless prior to the expiration of the validity
another continuation statement authorized by that secured
party is filed. The validity of a notice shall thereupon
continue only with respect to the secured party who
authorized the filing of the continuation statement.
(4) Succeeding continuation statements may be filed in
the same manner to continue the validity of the notice.
17. (1) The validity of a notice may be terminated by Termination of
filing a termination statement in the prescribed form. notice.
12 Secured Transactions Act, No. 49 of 2009
(2) Upon the receipt of a written demand from a debtor,
the secured party may file a termination statement if there
is—
(a) no outstanding secured obligation;
(b) no commitment to make an advance; and
(c) written authorization for the filing of a notice by
debtor.
Effectiveness 18. (1) An initial notice, amendment, continuation
of notice. statement, or termination statement, shall be deemed to be
valid from the date of registration and inclusion in the
Register.
(2) The Credit Information Bureau of Sri Lanka may
refuse to accept any document for registration—
(i) where such document is an initial notice and such
notice fails to provide the name of a debtor;
(ii) where such document is an amendment and the
record fails to provide the name of a debtor;
(iii) where such document is a continuation statement
and the record fails to provide the file number of
the initial notice or has failed to deliver the same
within a period of six months from the date of expiry
of the first initial notice;
(iv) where such document is a termination statement
and the record fails to provide the file number of
the initial notice or the notice has lapsed with
respect of each secured party who’s name is
specified in the notice; and
(v) where the obligor has failed to pay the required fee
or no arrangement has been made for the periodic
payment of fees.
Secured Transactions Act, No. 49 of 2009 13
(3) Where Credit Information Bureau of Sri Lanka refuses
to accept a record for reasons other than the ones set out in
this Act, such record shall be valid as filed of record except
against in the purchase of collateral that gives the value in
reasonable reliance upon the absence of the record from the
files.
(4) Where the Credit Information Bureau of Sri Lanka
refuses to accept a record for filing, it shall promptly
communicate such fact with reasons, if any for its refusal, to
the person who presented the record.
(5) A notice authorized by one secured party on the notice
shall not affect the rights of another secured party on the
notice.
19. (1) A person who has reasons to believe that the Claim
name of the person is inaccurate or wrongfully specified in concerning
inaccurate or
the initial notice he shall forthwith take steps to bring such wrongfully filed
fact to the notice of the Credit Information Bureau of Sri notice.
Lanka, and the Bureau shall upon consideration of the matter
correct the name accordingly.
(2) A correction statement may—
(a) identify the record to which it relates by the file
number assigned to the initial notice;
(b) indicate that it is a correction statement;
(c) give reasons for the basis of the belief that such
statement is inaccurate and the manner of
rectification of such statement; and
(d) indicate that the notice covers accounts or chattel
paper that have been sold but as to which the debtor
or other person obligated has discharged its
obligation.
14 Secured Transactions Act, No. 49 of 2009
(3) A termination statement effectively terminates the
interest of a secured party on the notice, only if the
termination statement is authorized in writing by that secured
party. Upon the filing of an effective termination statement,
the notice to which the termination statement relates
becomes ineffective with respect to the authorizing of the
secured party.
Registration of 20. (1) The Credit Information Bureau of Sri Lanka
notice &c,. shall cause the registration of any notice, an amendment,
continuation statement or termination statement.
(2) The registration with the Credit Information Bureau
of Sri Lanka shall provide the final and conclusive evidence
regarding availability or non-availability of a mortgage in
respect of a collateral.
(3) Where the Credit Information Bureau of Sri Lanka
refuses to register any notice, amendment, continuation
statement or termination statement, it shall communicate
the reasons in writing to the person who applies for such
registration.
(4) A notice authorized by one secured party on the notice
and filed of record shall not affect the rights of another party.
(5) Any person who notifies that the notice filed of record
contains erroneous information, he shall file a document
rectifying such error forthwith.
Duty to give 21. (1) It shall be the duty of the Credit Information
information. Bureau of Sri Lanka to furnish prescribed information to
any person in relation to any notice filed therein.
(2) The Credit Information Bureau of Sri Lanka may issue
a Certificate in the prescribed form containing the required
information and maintain documents in the manner specified
in the rules.
Secured Transactions Act, No. 49 of 2009 15
PART IV
MISCELLANEOUS
22. (1) The Credit Information Bureau of Sri Lanka may Rules.
make rules in respect of the procedure relating to
administration, management, maintenance of documents and
procedure to be followed in the transaction of business in
terms of this Act.
(2) Every rule made by the Credit Information Bureau of
Sri Lanka shall be published in the Gazette.
23. (1) The Minister may make regulations for the Regulations.
purpose of carrying out or giving effect to the principles and
provisions of this Act or in respect of matters for which
regulations are required or authorized by this Act to be made
including the following:—
(i) the amount of the fees to be charged for services
rendered and the manner of collecting such fee
including the manner of carrying out the function
of maintaining the Register in terms of section 7
and the matters to be included in such Register;
(ii) the manner to conduct searches including the
manner to use electronic records;
(iii) form for the submission of notices and information
required;
(iv) particulars of the judgment creditor and the details
of the movable property, identification details of
the person owing payment or performance of the
judgment creditor, details and the notice of security.
(2) Every regulation made by the Minister shall be
published in the Gazette and shall come into operation on
the date of such publication or on such later date as may be
specified, therein.
16 Secured Transactions Act, No. 49 of 2009
(3) Every regulation made by the Minister, shall as soon
as convenient after the date of its publication in the Gazette,
be brought before the Parliament for approval. Any regulation
which it is not so approved shall be deemed to be rescinded
from the date of disapproval, but without prejudice to
anything previously done thereunder.
(4) Notification of the date on which any regulation is
deemed to be so rescinded shall be published in the Gazette.
Sinhala text 24. In the event of any inconsistency between the
to prevail in Sinhala and the Tamil texts of this Act, the Sinhala text shall
case of
prevail.
inconsistency.
Interpretation. 25. For the purposes of this Act, unless the context
otherwise requires—
“assignment” means the transfer from one person to
another, in whole or in part, of any right in an
account, chattel paper, document, instrument, or
other right to payment;
“chattel paper” means a record that creates a debt and
a security interest in, or a lease of, goods;
“credit Information Bureau of Sri Lanka” means the
Credit Information Bureau of Sri Lanka
established under section 2 of the Credit
Information Bureau of Sri Lanka Act, No. 18 of
1990;
“collateral” means the property subject to a security
interest, and may include movable things of any
nature, intangible things of any nature, farm
products, fixtures, timber to be cut, and minerals
to be extracted, and includes collateral that arises
in the future, and collateral located in or outside
of Sri Lanka, accounts and chattel paper that have
been sold, leased goods, and proceeds;
Secured Transactions Act, No. 49 of 2009 17
“judgment creditor” means—
(i) a person who obtains a right in a secured
party’s collateral, or a right to seize a secured
party’s collateral, by order of a court or by any
authority under prevailing law, other than the
Inland Revenue Act, No. 10 of 2006;
(ii) the liquidator under the Companies Act, No.
7 of 2007;
(iii) the receiver under the Insolvency Ordinance
(Chapter 97); and
(iv) a preferential creditor;
“notice” means a record filed or presented for filing in
the Register maintained by the Credit Information
Bureau of Sri Lanka and includes an amendment,
continuation statement, and termination
statement that are filed or presented for filing. An
“initial notice” is the notice to which an
amendment, continuation statement, termination
statement, or correction statement may relate;
“National Identity Card” means the national identity
card issued under the provision, of the Registration
of Persons Act, No. 32 of 1968;
“proceeds” means—
(i) whatever is acquired upon the sale, lease,
license, exchange, or other disposition of
collateral;
(ii) whatever is collected on, or distributed with
respect to, collateral;
(iii) rights arising out of collateral;
18 Secured Transactions Act, No. 49 of 2009
(iv) to the extent of the value of collateral, claims
arising out of the loss or non-conformity of,
defects in, or damage to the collateral; and
(v) to the extent of the value of collateral and to
the extent payable to the debtor or the secured
party, insurance payable by reason of the loss
or non-conformity of, defects in, or damage to
the collateral;
“secured party” means a lender, seller or other person
in whose favour a security interest is created under
a security agreement, including a person to whom
accounts or chattel paper have been sold, and a
lessor of goods;
“secured transaction” means any transaction specified
in section 2 of the Act;
“value” means the value that a person gives where the
person acquires the rights—
(i) in return for a binding commitment to give
credit, whether or not drawn upon; or
(ii) as security for, or satisfaction of, a pre-existing
claim, in whole or in part;
(iii) by accepting delivery pursuant to a pre-
existing contract for purchase; or
(iv) in return for anything given in exchange, for
promise.

Secured Transactions Act, No. 49 of 2009 19
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