The Personal Property Securities Act 2009 (Cth) (PPSA) came into operation in early 2012. It will create the Personal Property Securities Register (PPSR) which will be a single national register of security interests over personal property, replacing over 20 existing state and Federal registers.
The PPSA will streamline the registration of security interests but will also make some fundamental changes to the way security interests are recorded over personal property so the new legislation is likely to have significant implications for businesses.
In addition, the PPSA creates a new kind of security interest for funds advanced to secure the purchase of goods called a purchase money security Interest (PMSI), and alters the existing law of priorities in relation to certain kinds of leases of goods known as PPS leases. The lessor under a PPS lease will now need to register a security interest over personal property leased to the lessee or risk losing priority to other creditors of the lessee if the lessee becomes insolvent.
PPSA also significantly alters the existing law in relation to retention of title clauses in supply contracts. Retention of title clauses will no longer offer the same level of protection in the event that a customer becomes insolvent. After the PPSA takes effect, it will be necessary to register a security interest on the PPS Register in relation to goods supplied to avoid losing priority to other creditors of the customer in the event the customer becomes insolvent.
Important considerations and strategies
Some key issues and strategies for businesses to consider in this context are:
- Transitioning of existing securities on to the PPS Register, and the need to perfect existing securities within 24 months
- Refining customer credit application process to include steps to obtain PMSI status
- Renegotiating existing credit customers on ROT terms to grant PMSIs and putting in place processes to register PMSIs
- Reviewing and amending standard security documents / commercial arrangements to include PPS enabling clauses
- Re-engineering internal practices and procedures to manage timely registration of interests
How can we help
Some of the ways we can help are:
- Providing PPS FAQs for internal / external use / training / familiarisation
- Providing your staff with focussed training
- Reviewing customer contracts to determine if you can unilaterally update for PPS / PMSI
- Amending commercial contracts to include suitable PPS clauses
- Preparing PPS transitional general security agreement - allows ASIC registration now and PPS registration later
- Assisting you in perfecting transitional securities
- Providing strategic advice on implications of PPSA for specific industry groups