A lender with well-drafted security documents can still end up with security worth nothing, because the documents were never properly perfected, or were perfected in the wrong order relative to a competing claim. In secured lending, drafting is necessary but not sufficient — perfection is what actually gives the security its priority against everyone else who might have a claim on the same asset.
The instruments
The security instrument depends on the asset. Land is secured by a charge, registered against the title at the relevant Land Registry under the Land Act and the Land Registration Act. Movable assets, receivables, and a company’s undertaking generally are secured by a debenture, which typically combines a fixed charge over specific identifiable assets with a floating charge over the rest — inventory and receivables that turn over in the ordinary course of business are the classic example of assets that need a floating rather than fixed charge, because the business needs to keep dealing with them. Shares are secured by a share charge, which involves both an agreement and steps to note the charge against the relevant share register.
Registration
A charge created by a company must be registered with the Registrar of Companies within a set period after creation [VERIFY: current statutory deadline for registering a company charge under the Companies Act], and separately, security over land must be registered at the Land Registry against the specific title. These are not alternatives — security over land granted by a company typically needs both registrations, since they protect against different risks: registration at the Companies Registry gives notice to the company’s other creditors and, critically, to a liquidator if the company later becomes insolvent, while registration at the Land Registry protects the charge against later dealings with that specific title, including a subsequent purchaser or a further charge granted over the same land.
Search before you lend
Before completion, a lender should run a search against the borrower at the Companies Registry to check for existing registered charges. A company search does not just confirm the borrower’s good standing — it reveals whether a prior lender already holds security over the same or overlapping assets, since a fresh charge does not automatically take priority over an earlier one just because it is more recent. Where an existing charge is found, the practical question becomes whether it needs to be released, whether the new lender needs a deed of priority with the existing chargeholder, or whether the facility should be restructured around the security actually available.
Why perfection order matters
Security interests generally rank in the order they are perfected, not the order the documents were signed. A lender who signs first but registers late can find a second lender who registered promptly has priority over the same asset. This is why the practical sequence on a secured lending transaction matters as much as the drafting: security should be perfected as close to completion as the mechanics allow, and the registration deadline should be treated as an outer limit, not a target.
What an unperfected security is actually worth
An unregistered charge that should have been registered is void against a liquidator and against other creditors of the company, even though it remains valid and enforceable between the lender and the borrower directly. In practice this means that if the borrower becomes insolvent before the charge is registered, the lender that thought it had security ranks as an unsecured creditor instead — behind every properly perfected secured creditor, and often behind statutory preferential claims as well. A debenture that was never registered is, in an insolvency, not meaningfully different from having taken no security at all.
Common timing traps
The most frequent issue is treating registration as administrative follow-up rather than part of completion itself — documents are signed, funds are released, and registration happens “in due course,” which sometimes means after the registration deadline has already passed. The second is security taken over an asset that is later refinanced or replaced without anyone re-registering the security against the new arrangement, leaving a gap between what the lender believes is secured and what is actually perfected. The third is cross-border groups, where security is taken over Kenyan assets to support a facility governed by foreign law, and the Kenyan perfection steps are treated as a formality to be dealt with locally rather than integrated into the main completion timetable.
The practical discipline
Treat perfection as part of completion, not paperwork that follows it. A facility should not be treated as fully secured, and funds should not be released against the expectation of security, until the relevant registrations are actually filed — confirmation of filing, not just execution of documents, is what a lender should be looking for before treating a transaction as closed.
