The Personal Property Securities Act 2009 (Cth) ("PPSA") is a new law relevant to security interests in personal property. Although the PPSA is already law, it will not commence until May 2011.
The PPSA establishes a single national law in respect of security interests over both tangible assets (such as motor vehicles, plant and equipment, inventory, crops and livestock) and intangible assets (such as intellectual property, contractual rights and shares). However, real property is excluded from the PPSA.
After commencement of the PPSA, any new security interests over personal property will have to be notified on the Personal Property Securities Register ("Register"). The Register will be a "noticeboard" of security interests – not a register of documents. Businesses will note their security interests on the Register by lodging a Financing Statement outlining certain details required by the PPSA.
The PPSA replaces the traditional notion of a fixed and floating charge and the concept of crystallisation of a floating charge over property. Instead, there will be a charge over "circulating" and "non-circulating" assets. As a practical matter, the relevant security agreements will take a similar form to that of fixed and floating charges.
All charges currently registered on the ASIC register will be migrated to the Register under the temporary perfection arrangements provided for in the PPSA.
Businesses which supply goods should pay particular attention to the requirements of the PPSA as those businesses will need to register security interests over any goods supplied to minimise any risk of defeat of retention of title clauses.
Although businesses will have 10 months from commencement of the PPSA to understand the new law's requirements, businesses should start development of appropriate compliance programs as soon as possible. These should include an assessment of what assets will be covered by the PPSA (such as a commercial consignment or an equipment lease, not a security interest under current laws) and whether an interest will need to be registered, what additional information will be required to register an interest, and a review of any retention of title clauses in your terms of trade.
If you would like further information or assistance, please contact Tim Edwards, Partner, Lyle Abel, Partner or Damien Timms, Senior Lawyer.
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.