Law & Regulation
Security by Means of Movable Property Act 57 of 1993
Gives specified registered notarial bonds over movable property a stronger statutory effect than ordinary general notarial bonds historically enjoyed: qualifying property is deemed pledged to the bondholder without physical delivery, subject to statutory identification and registration requirements. A specialised movable-security statute — not a comprehensive code of every South African security device.
Legal Significance
What This Instrument Does
Creates the statutory architecture through which movable property may be specially described and encumbered by a registered notarial bond so that the property is deemed pledged to the bondholder as effectively as if physically delivered. Addresses identification of collateral, registration, discharge/cancellation mechanics (section 1(2)), exclusion of the landlord's tacit hypothec over qualifying property (section 2), a transitional insolvency-preference rule for bonds registered before the Act's commencement (section 1(3)–(5)), a standalone repeal of the pre-1993 Natal notarial-bond statute (section 3), an Insolvency Act amendment (section 4), and a narrow savings clause protecting specified State, publicly-supported-body and Agricultural Credit Act rights (section 5). Instrument boundary: not a universal movable-assets security code — does not create security over immovable property, replace possession-based pledge or cession, establish all priority rules, prove the grantor's title, or determine every insolvency consequence.
Why It Matters
Project companies and operating businesses often need to grant security over machinery, equipment and other movable assets without surrendering possession. A qualifying special notarial bond can support asset-level collateral while allowing continued operational use. For lenders and security agents, the central diligence questions are whether the assets are capable of being covered, described with statutory sufficiency, owned by the grantor, registered correctly and still identifiable when enforcement or insolvency occurs.
Key Provisions
- Section 1(1) — Special notarial bond and deemed pledge
Gives a registered bond over specified movable property the effect of a pledge without delivery when the statutory identification standard is met. Practical consequence: describe collateral so third parties can identify it without relying on extrinsic evidence beyond the permitted statutory standard.
- Section 1(1) — Registration requirement; no physical delivery
Conditions the statutory effect on registration and deems qualifying property pledged despite the absence of delivery. Practical consequence: treat registration evidence as a completion deliverable; continued debtor possession is compatible with the device.
- Section 1(2) — Discharge and cancellation of bond
On discharge of the secured debt, requires the mortgagee, at the mortgagor's request and free of charge, to furnish proof of discharge in the form required to cancel the bond. Practical consequence: build bond-cancellation mechanics and timing into repayment/refinancing checklists.
- Section 1(3)–(5) — Transitional insolvency preference for pre-commencement bonds
Gives a notarial bond registered before the Act's commencement (other than a Notarial Bonds (Natal) Act bond) the same insolvency preference over the estate's free residue as a general bond under Insolvency Act section 102, subject to a carve-out where the free residue was already distributed under a confirmed account, and a requirement to reopen an account confirmed but not yet paid out at commencement. Practical consequence: do not assume a pre-1993 general notarial bond lost its preference — confirm treatment under section 1(3)–(5).
- Section 2 — Exclusion of landlord's tacit hypothec
Excludes movable property subject to a qualifying special notarial bond or an instalment sale agreement from the landlord's common-law tacit hypothec, subject to the Act's own conditions. Practical consequence: check lease status and any prior perfected hypothec before assuming the special bond automatically defeats a landlord's claim.
- Section 3 — Repeal of the Notarial Bonds (Natal) Act
Repeals the Notarial Bonds (Natal) Act 18 of 1932 as a standalone repealing provision, carrying no savings proviso of its own. Practical consequence: do not read section 3 as preserving legacy-bond preference — that transitional treatment is a matter for section 1(3)–(5).
- Section 4 — Amendment of the Insolvency Act
Amends the definition of "special mortgage" in section 2 of the Insolvency Act 24 of 1936 to align it with the new statutory bond mechanism. Practical consequence: read the Insolvency Act's secured-claim provisions together with this amendment when assessing ranking.
- Section 5 — Savings for State, publicly-supported-body and Agricultural Credit Act rights
Preserves any mortgage, hypothecation, pledge, tacit hypothec, preference, lien or right of retention acquired by or under any law by the State or a publicly-supported body, and any right under the Agricultural Credit Act 28 of 1966. Practical consequence: do not invoke section 5 for an ordinary private legacy security arrangement — its scope is confined to the specified categories.
InfraLex Relevance
The principal frozen statutory record for the special notarial-bond mechanism, preserving the editorial boundary with common-law pledge and cession, general notarial bonds, company filings and insolvency priority.
Legal Framework Position
- Security / CollateralPrimary / Framework Instrument
Instrument Overview
- Official Citation
- 57 of 1993; Government Notice 783, Government Gazette 14786; assented to 29 April 1993
- Instrument Type
- Law / Act
- Source Language
- English
- Enactment Date
- 7 May 1993
- Effective Date
- 7 May 1993
- Last Verified
- 6 September 2026