The Personal Property Securities Act is expected to
commence in May 2011 and will have a dramatic impact on the
Australian legal landscape. It draws on similar reforms in New
Zealand, Canada and the USA.
Elimination of duplication, inconsistencies and anomalies under
Currently, there are more than 70 separate acts and related
statutes across Australia which regulate personal property
securities. These instruments give rise to multiple registration
requirements, inconsistent priority rules and many cross-border
anomalies. The Act intends to harmonise law and practice on
personal property securities and will be supported by a single
online register which will be operated by the Insolvency and Trustee Service
The Act applies to all security interests in personal property
which secure payment or performance of an obligation, regardless of
the form of the transaction, the legal personality of the grantor
or the jurisdiction in which the property or parties are located or
in which the transaction occurs.
Personal property includes all forms of both tangible property,
such as goods, and intangible property, such as intellectual
Some of the changes under the PPSA
Financiers will be required to modify security documents and
procedures in relation to charges, mortgages over all property
other than land, vehicle and equipment leases and hire purchase
The company charge registration system under the Corporations
Act will be replaced and the concepts of a floating charge and
crystallisation will be redundant. Instead, extinguishment
provisions in the Act will protect a third party which acquires an
interest in a circulating asset. State and territory registration
systems for motor vehicle and boat encumbrances and for bills of
sale will be replaced.
Security interests given by individuals which were not formerly
registrable will now become registrable and subject to a statutory
priority and enforcement regime giving greater certainty to
Rights of manufacturers and suppliers in respect of
consignments and retention of title arrangements will constitute
security interests that will need to be registered to minimise the
risk of being defeated.
Registration of financing statements
The Act authorises the registration of a "financing
statement" that describes personal property before or after a
security agreement is made covering the property, or a security
interest has attached to the property. This allows prior
registration, thus alleviating the risks associated with delays in
attending to registration of a security interest after settlement
in a finance transaction.
Necessary changes to business processes under the PPSA
The introduction of the PPSA and the changes to the Australian
legal system that it brings will have a significant impact on most
business within Australia. We will be holding a seminar covering
these changes in detail, examining the ways in which your business
processes will need to change to adapt to the new legislation.
Please refer to our website in the coming weeks for further
Swaab Attorneys was the highest ranking law firm and the
13th best place to work in Australia in the 2010 Business Review
Weekly Best Places to Work Awards. The firm was a finalist in the
2010 BRW Client Choice Awards for client service and was named the
winner in the 2009 Australasian Legal Business Employer of Choice
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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