Still unsure if the Personal Property Security Act 2009 (Cth) ("PPSA") applies to you? At Thynne & Macartney we've developed 4 simple questions to assist you and your business in determining how the PPSA may impact you:
- Who are you/your business?
- Who are your clients?
- What types of property do you deal with?; and
- What transactions do you participate in?
Answer the following to establish whether the PPSA applies to you:
1. Are you any of the following:
- Authorised Deposit Taking Institution;
- Retailer;
- Manufacturer;
- Supplier;
- Bank (or other lending institution);
- Lessor;
- Builder (or other entity who leases equipment or construction materials (fencing, portable toilets etc.))
- Wholesaler;
- Franchisor (especially if you are providing your franchisee's with branded equipment, materials, signage etc. to use in their business)
- Distributor;
- Consignor;
- Buyer or trader of account receivables;
- Insurer;
- Trustee; or
- Pawnbroker.
Why are we asking this question?
The PPSA will affect a wide variety of stakeholders. Where once, the term 'security' was limited to the world of banking and finance, the PPSA expands this definition to include situations where one party holds an 'interest' in goods (such as a manufacturers, retention of title suppliers, leases for more than 1 year). If you are involved in any of the above activities you will need to register a financing statement on the Personal Property Securities Register to protect your interest in those goods.
2. Do you or your business deal (e.g. enter into leases, bailments, sales or security transactions) with any of the following types of property:
- Motor vehicles;
- Aircraft;
- Livestock (including progeny);
- Crops;
- Documents conferring title (bills of lading, warehouse receipts);
- Chattel paper (i.e. a chattel mortgage);
- Currency;
- Debts;
- Licences;
- Minerals (whether solid, liquid or gaseous);
- Investment securities (e.g. shares); or
- All present and after acquired property.
Why are we asking this question?
The PPSA deals with all manner of property except land, fixtures and particular licences. If you or your business deals with any of the above property it is likely the PPSA will affect you.
2A. Do you or your business currently conduct background checks, credit rating analysis, security interest searches or other verification checks?
Why are we asking this question?
The PPSA will require security interests in over 70 registers to be migrated to one central location known as the Personal Property Security Register ("PPSR"). Even if you are not in the business of lending or borrowing yourself, if part of your business involves conducting these searches you need to be aware of the changes to the location of much of the information you search.
3. Are your customers any of the following:
- An individual located in any part of Australia
- An Australian company; or
- A Commonwealth, State, or Territory public authority agency or instrumentality.
Why are we asking this question?
The PPSA is a Commonwealth Act and applies to all of the above people/entities.
4. Do you or your business currently engage in any of the following transactions?
-
Hire purchase agreements;
Example: Where one party, Mr. Smith, agrees to pay an initial deposit to XYZ Company in exchange for possession of the item. Mr. Smith then continues to pay XYZ Company until the item is paid off. Title in the item then passes to Mr. Smith.
- Hire purchase agreements are security interests and suppliers of goods will be required to register their interest in the goods on the PPSR.
-
Rental lease agreements for a term of more than one year
Example: Mr. Smith, a farmer, enters into an agreement with Mr. Jones, a farmer of an adjacent property, allowing Mr. Smith to lease Mr. Jones' shearing shed and equipment to shear his sheep.
-
Supply of equipment;
Example: XYZ Fridge Manufacturers provide Mr Smith's electrical superstore with 15 fridges to display in Mr Smith's store.
-
Bailment of goods;
Example: XYZ Bank gives $100,000 to Mr. Smith to buy 2 cars and a taxi licence. Mr. Smith then enters into an agreement to 'bail' the vehicles out to Red and Orange Taxi company as part of their larger fleet of taxi cabs.
-
Consignments
Example: XYZ cosmetic company enters into an agreement to have Jones David department stores sell their cosmetics. Here, XYZ retains title in the goods until Jones David sells them.
-
Supply goods on a retention of title basis
Example: XYZ company gives possession of goods to Jones David to sell in their stores. Title is retained by XYZ company until Jones David pays for those goods.
- Fixed and floating charges;
- Importing or exporting goods;
- Chattel mortgages;
- Debt factoring agreements; or
- Trust deeds and receipts.
Why are we asking this question?
The scope of the PPSA means that it will impact on almost every transaction. The above list is not exhaustive and it is likely, if you are entering into transactions which involve the transfer of title or possession to another party, that the PPSA will affect you.
If you answered YES to one or more of the above questions, we recommend you contact us to discuss how the PPSA team at Thynne & Macartney can help you and your business prepare for the commencement of the PPSA on 31 October.
For further information:
Amanda Bull
SENIOR ASSOCIATE
P: 07 3231 8712
E: abull@thymac.com.au
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.
