Law Governing Credit Practice – KASNEB DCM Syllabus



This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply legal principles in credit management decisions.


A candidate who passes this paper should be able to:

  • Identify the securities available in lending
  • Comply with the procedures applicable on securities contracts
  • Identify the rights and duties of lenders and borrowers
  • Demonstrate knowledge of bankruptcy and insolvency law as it applies to credit management.


Introduction to securities

  • Meaning of a security
  • Types of securities
  • Advantages and disadvantages of collaterals
  • Formation of a contract
  • Qualities of a good security
  • Enforcement and perfection of securities

Land as security

  • Meaning of land
  • Land tenure: freehold and leasehold
  • Advantages and disadvantages of land as security
  • Creation of charges and mortgages
  • Procedure for perfecting title to land as security
  • Rights and duties of the parties to a charge and mortgage
  • Remedies
  • Release of security

Intellectual property as collateral

  • Meaning of intellectual property
  • Types of intellectual property
  • Procedures for perfecting a security interest in intellectual property
  • Advantages and disadvantages of using intellectual property as collateral
  • Rights and duties of the parties
  • Remedies
  • Discharge of security

Guarantees and indemnities

  • Meaning and characteristics
  • Formation
  • Parties
  • Rights and duties of the parties
  • Termination of contract of guarantee and indemnity
  • Advantages and disadvantages of guarantee and indemnity as security

Bailment, pledge and lien

  • Meaning and characteristics
  • Formation, rights and duties of the parties
  • Remedies for breach termination

Corporate securities

  • Meaning and characteristics
  • Debentures
  • Remedies of a debenture holder
  • Charges
  • Shares and Corporate bonds
  • Common clauses incorporate bonds

Government borrowing

  • Treasury Bills
  • Treasury Bonds
  • Borrowing by County Government
  • Debt recovery by litigation


  • Meaning
  • Acts of bankruptcy
  • Bankruptcy proceedings
  • Rights of creditors
  • Consequences of bankruptcy
  • Discharge of a bankrupt


  • Meaning of Insolvency
  • Receivership
  • Types of liquidation
  • Official Receiver/Liquidator
  • Committee of inspection
  • Distribution of assets
  • United Nations Commission on International Trade Law UNCITRAL) legislative guide on Insolvency Law
  • United Nations Commission on International Trade Law (UNCITRAL) model law) on cross border listing
  • World Bank Principles and Guidelines for Effective Insolvency and Creditor Rights Systems

Emerging issues and trends

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