The Personal Property Securities Act 2009 (Cth)
("PPS Act") was passed as legislation in
December 2009. Although the PPS Act has not received extensive
exposure and attention, it is likely to have far reaching
consequences for many businesses and the function of providing
credit and finance.
The legislation applies to "personal property", which
includes most forms of tangible assets, (although there are some
exceptions such as land and certain government licences). For
example, stock, equipment, vehicles, intellectual property,
financial products and debts. It also can include intangible assets
such as intellectual property and trade marks.
The PPS Act will impact on those businesses and organisations
dealing with a "security interest", such as:
fixed and floating charges, (including prescribed charges
registrable under the Corporations Act)
certain types of leases of personal property
hire purchase agreements and
retention of title (Romalpa) claims.
The legislation introduces significant changes to the manner in
which securities are dealt with and even concepts such as to legal
title and will have far reaching consequences for many
The intention of the PPS Act is to provide single uniform rules,
within a national system and to reduce the complexity of laws
regarding security interests.
The PPS Act will amongst other things:
require the registration of prescribed securities, including
those types of securities which currently may not be required to be
registered, (eg. retention of title claims)
establish rules of priority between competing securities
set out rules governing when securities can be enforced
determine when an asset is purchase free of any security.
Under the legislation a new national PPS register will be
created to replace existing state and federal registers for
securities, including the existing registration of registered
mortgage debentures granted by companies and currently registered
with ASIC. The PPS register will be a searchable register, with 24
hour online access.
Based on current timetable expectations, this legislation and
the new national register is expected to come into effect in
It is important that businesses obtain appropriate legal and
financial advice to determine what they need to do to prepare for
the PPS Act. Some suggested points to consider are as follows:
for businesses providing credit, the terms of trading should be
reviewed to determine,whether a security interest is created and
registration of any security interest is required. Terms of trading
should also be reviewed to ensure that enforcement rights are
where a retention of title claim is obtained over goods
supplied, these arrangements should be reviewed and appropriate
steps taken to have the retention of title arrangement registered
as a security interest
the National PPS register will provide an important source of
information for businesses and others wanting to confirm whether an
asset is subject to a registered security interest, as such
businesses should become familiar with this register
existing securities granted by businesses, such as fixed and
floating charges may need to be reviewed, to ensure appropriate
security structures are maintained with no unintended consequences.
This may affect borrowers, with existing facilities, secured by
fixed and floating charges
the PPS Act introduces new terminology and concepts and
familiarity with these concepts will assist businesses in dealing
with the Act and its impact on businesses.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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