sidered by the approximately 100
experts in secured transactions law
in attendance at the Colloquium
included a supplement to the Legislative Guide covering certain types of
securities not covered by the Unidroit
Convention on Substantive Rules for
Intermediated Securities, regulations
on registration of security rights, a
model law on secured transactions
based on the recommendations
contained in the Legislative Guide,
a contractual guide on intellectual
property licensing, and a contractual
guide on secured financing.
The results of the discussions on
each of these issues will be submitted
to the Commission which will make a
determination on which issues related
to secured transactions will be pursued next by UNCITRAL. The decision is
expected later this year.
CFA was represented at the Colloquium by CFA president Keith Karako
of Citigroup and co-general counsel
Richard Kohn of Goldberg Kohn.
The CFA Education Foundation
provided financial support for the
Colloquium and the CFA hosted a
reception for the approximately 100
experts in secured transactions law
from around the world who attended
the three-day program.
CFA Represented at Conference on Democ-
ratization of Credit in Latin America
The Inter-American Development Bank
held a conference on the democratization
of credit in Latin America in late February in Washington, DC. One of the main
focuses of the conference was the role
secured transactions can play in helping a
country build its economy.
CFA’s chief operating officer, Brian Cove,
participated in a panel at the conference
titled Secured Transactions as a Develop-
ment Tool: Lessons Learned, Best Practices,
and Next Steps in Latin America and the
Caribbean. Moderated by Rogerio Studart
of the World Bank, the panel also featured
Boris Kozolchyck of the National Law
Center for Inter-American Free Trade and
Marco Bogran of Millennium Challenge
Account-Honduras. The panel discussed
past experiences with introducing secured
transactions laws in Latin America and
detailed what needs to be done to further
promote the adoption of such laws
throughout the region.
◗ A simple and efficient way to create
a security interest in the borrower’s
assets, with minimal formalities (ideally
not requiring translations or appearance before a notary).
◗ The security interest should be able
to cover both existing and future assets without further documentation
or action by the secured party or the
borrower, and should be capable of
covering a wide range of obligations,
including future obligations.
◗ A simple and transparent way of
making the security interest effective
against third parties (“perfection” under
the UCC) in the form of a notice-filing
system. This filing system should be
searchable by prospective lenders. Also,
filings of notices should be inexpensive
and ideally internet-based.
◗ There must be clear rules for determining the priority of security interests, as
against other security interests and other
competing claimants, such as judgment
lien creditors and buyers of the assets.
◗ There must be an efficient procedure
for enforcing the security interest,
ideally non-judicially (without the requirement of a court proceeding) unless
requested by the secured party.
◗ There must be a close harmony
between the secured lending laws and
the insolvency laws, so that security
interests are recognized in the insolvency proceeding and the secured party
ultimately receives the economic value
of its collateral.
◗ The secured transactions laws are only
one side of the coin. In order to promote
secured lending, the court system must
be efficient and inspire confidence.
There is growing support of the
introduction of laws on secured lending
that will enable Latin American countries to meet the conditions outlined
above. The Organization of American
States approved a draft model law on
secured transactions in 2002. This law
has been adopted by the governments
of Guatemala and Honduras and efforts
are under way in a number of other
countries in the region, including El Salvador, Panama, Costa Rica and Colombia. As more countries adopt the OAS
model law and effectively implement
its provisions, the ability of secured
lenders to safely and comfortably provide capital to businesses throughout
the region will grow. TSL