The Personal Property Securities Act
(PPSA) is due to commence on 30 January 2012.
The PPSa is one of the most significant reforms to australian
commercial law in decades. it will dramatically change core
business practices for a wide-range of australian services and
businesses, including in the rural/agribusiness sector.
The PPSa applies to virtually all types of property (except
land). the PPSa requires that businesses register all security
interests on the Personal Property Securities register
For example, from January 2012, in addition to the more commonly
recognised security examples (e.g. charges, bills of sale, crop
liens), the following arrangements will also need to be registered
as a security interest on the PPSr:
retention of title arrangements (for example, produce supplied
to a wholesaler or retailer on trade account terms);
plant breeder rights; and
patents, design and trademarks.
A failure to register a security interest in relevant personal
property may result in the interest holder losing its priority
interest in those goods to other security holders such as banks,
landlords and creditors. that consequence can apply even against
the legal owner of the relevant property.
Primary producers/growers are also likely to start receiving
information from their own financiers and suppliers about how the
PPSa will impact on their commercial or banking relationships. For
a company that supplies fertiliser to a grower for crops on
credit terms should be taking steps to protect its interest in that
fertiliser by registering its interest on the PPSr;
some financiers are already asking growers/producers to confirm
that their business is "PPSA ready" and that terms and
conditions of trade have been reviewed for PPSA compliance;
any current security interest of a financier over a current
crop will be "migrated" to the PPSR with minimal
involvement of the farmer. However, any new crop liens will,
depending on the financier, look different to documents signed in
the past. The new breed of security documents will place additional
obligations on the farmer/grantor to ensure their financier's
security interest in a crop is protected.
All growers should review their terms of trade as well as terms
of trade they commonly sign or operate under. They should seek
advice on those terms to avoid inadvertently giving away rights
they may otherwise have under the PPSA and/or breaching any
covenants contained in current mortgages/charges with their
Thynne & Macartney is prepared to guide and assist clients
in navigating through the risks and compliance issues associated
with the PPSA. We can offer general PPSA advice and advice on
specific issues of concern. In appropriate cases, we can have a
member of our team attend a client's workplace to conduct a
PPSA seminar specifically tailored to their business needs.
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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