If you answered yes to any of these questions you need to understand the impact of the new Personal Property Security rules.
From 31 January 2012 if you do not register your interest, your security may be useless and title and ownership of goods you supply, or equipment you rent, may be lost.
The Personal Property Security Legislation is intended to create a simple online registration system for all security interests. It applies to goods but does not apply to land interests.
The main areas of application are:
1. Retention of Title ("Romalpa") clauses.
These are clauses in your contracts of sale that allow you to keep title to goods that you sell until they are paid for. If your debtor defaults you may take back the goods. Your title has priority over liquidators. Under the Personal Property Security Rules you will need to register your contract (one registration covers multiple sales to the same customer) for all new contracts after 30 January 2012 or the clause will not be effective. For existing contracts you must register by 30 January 2014 for the clause to be effective.
2. Leases of goods for more than 12 months (or 90 days for serial numbered goods).
If you lease goods to someone and they fail to pay the rent you may be able to take the goods back, even if there is a liquidator appointed. Under the Personal Property Security Rules this right will be lost unless you register your lease (and you may be able to register it as a Purchase Money Security Interest "PMSI" which has super priority!) For existing leases you have a 2 year window in which to register or your priority may be lost.
You may find your existing suppliers or lenders contacting you to confirm security or trading arrangements under the guise of these rules. You should ensure that these confirmations don't increase the priority of these people or result in your giving further security. Maybe you should secure your personal loans to your business!
The register is to be maintained by the Insolvency Trustee and Services Australia ("ITSA"). At this stage the register is not online!
Once the register is running you should confirm any interests registered by you or against you by doing a search.
Click here to access the ITS website.
Click here to access the government website that explains these new rules.
Please feel free to contact Stephen Adrian, Director, who is our practice leader in relation to this reform.
This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2011 Moore Stephens Australia Pty Limited. All rights reserved.
