Securitisation of Ip Assets: an Examination of the Legal Regime on the Use of Intellectual Property as Collateral in Kenya

Abstract

The study interrogates the low uptake in the use of IP assets as collateral by small and medium scale enterprises (SMEs) to obtain capital to fund their businesses. It examines the current legal framework for securitisation of IP and the role it plays in increasing confidence for both lenders and borrowers. Securitisation of IP is governed by multiple laws with each creating separate registries for the recordal of security interests over IP assets. This multiplicity of law creates ambiguity and increases the risk and cost of securitisation. The Movable Property Security Rights Act, 2017 was enacted to simplify and consolidate the legal framework pertaining to collateralisation of movable assets in Kenya, however, it did not repeal the relevant provisions of the IP law regime hence resulting in conflicting rules on the securitisation of IP assets in Kenya. Further, the lack of integration of the Movable Property Security Rights Registry and the IP registries has resulted in parallel systems for securitisation of IP hence creating ambiguity in the process. In addition, the legal framework does not provide for IP specific remedies to enable creditors quickly realise their value where the grantor defaults in payment. The challenges in valuing IP assets and lack of ready markets for disposal of such assets also contributes to the low uptake of IP as collateral in Kenya.