Recently there has been significant reform relating to the Personal Property and Securities Act 2009 (PPSA). This reform basically nationalises the laws on Security Interests in personal property. Primarily, this law will affect financiers and focus mainly on business to business transactions as it brings about major changes to the way in which Company Charges (now referred to as Security Interests) are registered.
Lodgment of Security Interests (Company Charges)
Since Monday 30 January 2012, the Australian Register of Company Charges (ARCC) maintained by ASIC, had been officially replaced by the new national Personal Property and Securities (PPS) register.
he PPS register is now the only accessible online service to search and register current Security Interests.
The reason for the introduction of the PPS register is to remove previous uncertainty and confusion caused by the numerous Securities registers that existed in the states and territories.
What will be included on the PPS register?
Security Interests in all personal property are to be listed on the PPS register, where personal property includes any property other than land or buildings, and also intangible goods.
Examples of personal property could include fixed and floating charges, physical goods such as cars, boats, artwork, furniture, jewellery, crop and livestock, or intangible property such as intellectual property or rights under a contract among others.
Moving from the ASIC register to the PPS register
All current Security Interests will automatically relocate to the new PPS Register, as will all provisionally registered Security Interests. However, it should be noted that a provisionally registered Security Interest will no longer have any legal effect following this transfer. It will instead need to be re-registered on the PPS register within 24 months to retain the original creation date.
Aside from this, as advised by ASIC, all information on ASIC that has been satisfied prior to 30 January 2012 will remain available for searching for 7 years.
What else do the PPS reforms do?
In addition to introducing a nationalised register for Security Interests, recent PPS reforms also clarify confusions on rules and procedures, particularly in regards to securities relating to investments, and securities relating to business transactions, or trade.
For example, the question of whether an interest is a security interest is no longer dependent on factors such as the type of transaction or the identity of the person or who has title to the property. Also, the recent PPS reforms introduce a clear procedure in determining which secured party’s Security Interest has the highest priority when more than one Security Interest is registered over the same property, and clear guidelines are provided on the entitlements of secured parties.
Finally, it is important to note that the changes resulting from the PPS reforms further extend to the documentation and processes commonly used by businesses, the way that businesses conduct their trading relationships and the level of confidence businesses may have on the terms of those trading relationships in respect to security.
If you wish to find out more or require assistance in this area of law please contact our legal team.