The commencement of the new Personal Property Securities regime
is just over 3 months away. It is essential that businesses
consider how the PPS regime will impact upon the way they do
business and to ensure they put in place systems to ensure
compliance with the laws.
The implications of this new regime will be far reaching for all
business,not just those in the finance sector. The definition of
"personal property" under the Act can be somewhat
deceptive and it is vital that business understand that the regime
will encompass securities over not only the typical consumer goods,
but a wide range of commercial goods.
The Act defines 'personal property' as 'property
other than land' with two particular exclusions being any right
that is granted under a commonwealth, State or Territory law and
anything particularly declared not to be personal property. This
definition will result in security interests taken over a very wide
range of both consumer and commercial property being subject to the
The result of this wide definition is that many security
interests previously not required to be registered will now need to
be included on the Personal Property Security Register ("the
Register") to ensure businesses protect their priority.
Failure to register existing and newly created securities will
result in those securities being exposed to subsequent interests
being created over that property and those interests in turn
obtaining priority through registration.
The new regime significantly expands the traditional concept of
'security interest'. Again the Act includes a wide
definition that includes any interest in personal property provided
for in a transaction that in substance, secures payment or the
performance of an obligation. The effect of this wide definition,
combined with the wide definition of 'personal property' is
that transactions that have previously not been registrable
security interests will now need to be registered under the new
The commencement of the new regime in October 2011 will now
bring into the scheme business transactions that previously did not
fall within any registration system. For example, consignment
agreements, retention of title arrangements, hire purchase
In order that businesses ensure they protect their current and
future security interests it is essential that they act now to
undertake the following steps;
Review all existing business contracts and consider whether
they must be registered ;
Check whether any of the above ccntracts comply with the
necessary requirements under the Personal Property Securities
Set up any process for identifying and managing registration of
This new regime introduces significant new priority rules and in
order to ensure businesses do not lose existing security protection
and to ensure they obtain priority on security interests created
post PPS, action should be taken before the commencement of the
scheme in October 2011.
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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