CHAPTER 248
LOANS AND ADVANCES REALISATION TRUST ACT

[SUBSIDIARY LEGISLATION]

INDEX TO SUBSIDIARY LEGISLATION

   RULES

      The LART Seizure and Disposal of Assets Rules

      The LART Loans Recovery Tribunal Rules

RULES

THE LART SEIZURE AND DISPOSAL OF ASSETS RULES

(Section 16)

G.Ns. Nos.
164 of 1993
308 of 1997

   1. These Rules may be cited as the LART Seizure and Disposal of Assets Rules.

   * 2. In these Rules, unless the context otherwise requires:

   "Act" means the Loans and Advances Realisation Trust Act *;

   "the amendment Act" means the Loans and Advances Realization Trust (Amendment) Act;*

   "assets" shall include–

   (a)   receivables and other obligations due to the Owner, lease, indemnity and other agreements together with all collateral security and other rights (including but not limited to rights in relation to shares or stock in a body corporate such as voting rights as well as rights to appoint directors of a body corporate or otherwise engage in the management thereof) granted to the Owner by contract or operation of law to secure or enforce the right of payment of such obligations;

   (b)   real and personal property of any kind owned or held by the Owner including shares or stock of a body corporate obtained by the Owner whether directly or indirectly, through foreclosure or other means in settlement of such obligations;

   (c)   shares or stock and other investments held by the Owner; and

   (d)   the business of the Owner and where the Owner is a body corporate the Owner itself whether as parent or subsidiary body corporate;

   "the Owner" means the borrower in respect of a non-performing asset.

   3. All seizure, disposal or such other acts related thereto by the Trust in respect of assets vested in the Trust in accordance with the Act and these Rules shall be carried out according to these Rules.

   4. Upon direction in accordance with section 13 of the Act, the bank or financial institution shall transfer to the Trust the identified non-performing assets in the following manner:

   (a)   the bank or financial institution shall execute a Deed of Assignment in respect of each non-performing asset in favour of the Trust in the form prescribed in the First Schedule to these Rules;

   (b)   the Deed of Assignment shall be executed and authenticated in the manner shown in the first schedule and the documentation shall be notarised to the effect that signatories are duly authorised officers of the bank or financial institution concerned, in the form prescribed in the Second Schedule to these Rules;

   (c)   Notice of the Assignment in favour of the Trust shall be in the form prescribed in the Third Schedule and shall be forwarded by the bank or financial institution to the Owner together with a letter in the form prescribed in the Fourth Schedule to these Rules as a confirmation of the assignment;

   (d)   the bank or financial institution shall deliver to the Trust on the date of execution of the Deed of Assignment such agreements, mortgages, debentures, instruments, documents of title, records and other documents in respect of the non-performing assets. Where any or all of such agreements, mortgages, debentures, instruments, documents of title, records and other documents in respect of non-performing assets have been registered the bank or financial institution shall issue an affidavit in respect of the date of execution and the date of registration in the form prescribed in the Fifth Schedule to these Rules;

   (e)   the bank or financial institution shall attach to the Deed of Agreement, a list of all agreements, mortgages, debentures, instruments, documents of title, records and other documents referred to in this Rule.

   * 5. (1) All assets, rights and obligations attached to a non-performing asset transferred by a bank or financial institution in pursuance of section 13(1)(a) and (b) of the Act and in the manner provided in Rule 4 shall be deemed to have been transferred and vested in the Trust with effect from 30th June, 1991.

   (2) All assets of the Owner, and rights and obligations relating to a non-performing asset transferred by a bank or financial institution in pursuance of section 13(1)(c) of the Act and in the manner provided in Rule 4 shall be deemed to have been transferred and vested in the Trust, with effect from the date of the Deed of Assignment referred to in Rule 4.

   (3) Upon direction by the Trust the Owner shall provide full information on all the assets owned by him including physical addresses, where applicable, where such assets are located.

   (4) Where the Owner refuses to give full information or gives information which is false shall be liable for prosecution and upon conviction shall be sentenced to pay a fine of not less than ten million Tanzania shillings or to a term of imprisonment not exceeding three years or both.

SEIZURE AND DISPOSITION

   6. Upon the vesting of all assets, rights and obligations in accordance with the provisions of Rule 5, the Trust may appoint in writing any person or persons, whether an employee or employees of the Trust or not, to be manager of the assets or any part thereof upon such terms as the Trust shall think fit and may in like manner, at any time remove any manager so appointed and appoint another manager.

   7. Every manager so appointed under Rule 6 shall be the agent of the Owner and the manager shall have authority and be entitled to exercise in addition to any other powers conferred upon him by any law, the following powers:

   (a)   to enter either personally, or by his servants or agents any premises in which any assets transferred to the Trust may for the time being be or any other premises owned or occupied by the Owner;

   (b)   to take possession of or to collect all or any part of the assets transferred to the Trust and for that purpose to institute proceedings in the name of the Owner or otherwise as the manager may deem expedient;

   (c)   to sell any assets transferred to the Trust in such manner and generally on such terms and conditions as provided in these Rules;

   (d)   to carry on or manage the business of the Owner and for that purpose to raise money either on the security of any assets or otherwise;

   (e)   to make such repairs, improvements and to insure such buildings, plant machinery and effects of the Owner as the manager shall deem necessary and conducive towards the enhancement or preservation of the value of the assets or business of the Owner;

   (f)   to cause shares or stock to be allotted and, or cause calls on the unpaid shares or stock to be made;

   (g)   to close down the business of the Owner where the Trust thinks that it is expedient to do so and to arrange and effect the disposal of the same;

   (h)   to do all such other lawful acts and things as may be incidental or conducive to any of the matters and powers under this Rule.

   8. All moneys received by the manager shall, after providing for all costs and expenses incurred in carrying out the sale or disposal of the assets of the Owner be applied:

   (a)   Where the Owner had charged the asset or assets or undertaking to secure the non-performing asset and the charges so created ranks in priority to any other:

      (i)   first in payment of all costs and expenses of and incidental to the appointment of the manager and the exercise of his powers under these Rules;

      (ii)   secondly in or towards payment to the Trust of all interest or charges unpaid in respect of the non-performing asset;

      (iii)   thirdly towards payment to the Trust of all principal moneys owing on the non-performing asset remaining unpaid;

      (iv)   fourthly in payment of any surplus to the Owner.

   (b)   Where the Trust is an unsecured creditor or the charges created in favour of the Trust do not rank in priority to all others:

      (i)   first in payment of all costs charges and expenses of and incidental to the appointment of the manager and the exercise by him of his powers under these Rules;

      (ii)   secondly to secured creditors who have been able to prove their debts before the Tribunal in the manner provided in these Rules;

      (iii)   thirdly to the unsecured creditors in the manner approved by the Tribunal;

      (iv)   fourthly in payment of any surplus to the Owner.

   9. (1) All costs, charges and expenses incurred by the Trust in obtaining or attempting to obtain payment of any moneys on the non-performing asset or any asset acquired by the Trust in relation to or under the securities thereof including (without limitation) such payments as the Trust may consider expedient from time to time to make and is authorised by these Rules to make to any person acting on the instructions of the Trust in convention, maintaining, repairing, amending or improving, preserving or enhancing the value of the assets and all such further of other moneys as shall by virtue of the provisions of subrule (2) of this Rule be deemed to be included in the expression "expenses" shall–

   (a)   bear interest at the rate for the time being payable on the non-performing asset from the time of the same having been expended or incurred until the same shall be repaid;

   (b)   be repaid with interest as aforesaid.

   (2)    The expression "expenses" shall be deemed to include all costs, charges, claims, damages, expenses and (without prejudice to the generality of the foregoing) other money properly paid or incurred by the Trust under the Act–

   (a)   in any action, proceedings, claim or demand against or for the recovery of the assets;

   (b)   in any action proceedings or claim brought by or against the Trust for the enforcement, protection, preservation or improvement of the security created for non-performing asset;

   (c)   in connection with the preparations, negotiations and completion of disposal of assets concerned and any correspondences and attendances relating thereto;

   (d)   in effecting any registration or act which the Trust may deem necessary or expedient for the proper protection of its security; or

   (e)   to advocates, architects, surveyors or other professional or technical advisors of the Trust in respect of their costs, fees and disbursements for attendances made, advice given, correspondences written or other work done by such persons or any of them in connection with any of the matters referred to in the preceding paragraphs of this subrule.

   10. (1) Where the Trust becomes or is an unsecured creditor in respect of a non-performing asset the Trust will issue a notice in the newspapers calling upon other creditors, it any, to file their claims within a period of 30 days indicating in the said notice what information is required.

   (2) Upon the expiration of the Notice issued under the preceding subrule the Trust will analyse the claims and call for a meeting of all the creditors. The Trust will endeavour to get an agreement as to the manner of apportioning the proceeds of sale of the assets and that agreement is to be recorded before the Tribunal.

   (3) Where the Trust fails to reach an agreement with the majority of the other creditors the matter is to be referred to the Tribunal for a hearing to determine the matter.

   (4) Any creditor aggrieved by the decision of the meeting of creditors may appeal to the Tribunal within 14 days from the date the decision appealed against was made and the Tribunal will hold a hearing to determine the matter.

   11. The Trust will, where possible, give priority to ensure sale on a "going-concern" basis failing which the Trust will embark on a liquidation sale.

   12. The Trust shall have full and complete powers to determine values, prices and other terms and conditions for disposition of assets; as a means to that end the Trust will prepare its own rules and procedures for identification of potential purchasers, selling or disposing assets by way of competitive bidding or other preferred method.

   13. The validity of any sale or disposition concluded by the Trust under these Rules shall, except for fraud, breach or material misrepresentation on the part of the purchaser, be final and binding and enforceable against the Trust and all third parties.

   14. (1) Where the Trust or the purchaser of any such asset or property sold under the provisions of these Rules is resisted or obstructed by any person in obtaining possession of such asset or property, the Trust or the purchaser may make an application to the Tribunal complaining of such resistance or obstruction.

   (2) The Tribunal shall fix a day for investigating the matter and shall summon the party against whom the application is made to appear and answer the same.

   (3) Where the Tribunal is satisfied that the resistance or obstruction was occasioned without any just cause it shall direct that the applicant be put in possession.

   (4) The Tribunal may also, at the instance of the applicant, order the person against whom the application was made to be detained as a civil prisoner for a term which may extend to 90 (ninety) days.

   15. (1) Any Owner who is aggrieved by an act of the Trust may make an application to the Tribunal stating his complaint within a period of 21 (twenty-one) days from the date the act being complained of was made.

   (2) The Tribunal shall fix a day for investigating the matter and may summon the Trust to appear and answer any questions which the Tribunal may consider relevant or necessary for a decision on the complaint.

   * 16. (1) Any person who acquires assets or any part thereof of the owner shall, notwithstanding any agreement to the contrary, be liable for all the debts and obligations owing to a bank or financial institution or part of the said debts and obligations to the extent of the value of the assets acquired, for which he as transferor is liable, unless notice of the intended transfer has been published in accordance with the provisions of this Rule hereinafter provided not less than two months nor more than six months before the date when the transfer is to take effect.

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