The Personal Property Securities Act 2009 (Cth)
("PPSA") will have a significant impact on the taking,
registration and enforcement of security over almost all kinds of
property, except land. The PPSA overturns fundamental property law
concepts including the long held concept of legal title. A complex
set of rules will now govern the enforceability of security
interests. The commencement date for the PPSA is 30 January 2012.
This guide briefly explains how the PPSA may affect your business
("you", "your") and what you
need to be doing now, with our assistance, in order to protect its
How the PPSA may affect you
Fixed and floating charges – your
existing charges (both as chargee and chargor) registered with ASIC
will be "migrated" to the PPSA Register
("PPSR") – a single national internet-based
register available 24/7. The concept of fixed and floating charges
will be replaced under the PPSA by "security interests over
non-circulating assets" and "security interests over
circulating assets" respectively.
Retention of title ("ROT")
– any supply of goods by you under a contract/purchase
order that contains a ROT clause will need to be reviewed and may
require registration as a purchase money security interest
("PMSI"). Currently, a supplier of goods under ROT may
retrieve its goods on the insolvency of the counterparty. Following
the PPSA commencement date, unless the ROT supplier registers a
PMSI as a security interest on the PPSR, the goods under ROT may
become the property of the company in liquidation and amount to a
windfall to its creditors.
Equipment hire – any equipment lease
of more than 12 months may require registration in order to protect
the interest which you have in the equipment.
Serial numbered goods – any lease of
serial numbered goods (eg dump trucks and other motorised mining
equipment with a speed of more than 10kph) of more than 90 days may
require registration in order to protect the interest which you
have in the goods.
Inventory and temporary works –
currently, as in ROT above, a contractor's title to inventory
and temporary works is assumed and is not under threat. Under the
PPSA, your title in any inventory and temporary works located on a
principal's land/property may be at risk of being defeated by
creditor's claims unless registered on the PPSR.
Joint venture agreements – interests
arising under cross charges and some default clauses in joint
venture agreements will fall within the PPSA regime and will need
to be reviewed. In particular, new cross charges will require
specific drafting changes to deal with the changes introduced by
Other considerations – hire purchase
agreements, conditional sale agreements, transfers of accounts
receivables, confidentiality obligations (amongst others) will also
How can we assist?
The ILH PPSA team can assist you by:
identifying existing security interests and whether these will
be the subject of automatic migration or whether new registrations
should be made;
reviewing the terms and conditions of your contracts including
standard terms of trade particularly given that ROT interests,
whilst currently not registrable, should soon be registered;
amending your standard contracts to be PPSA compliant by taking
into account the new terminology and rules relating to attachment,
perfection and priority of security interests as well as the PPSA
rules affecting issues such as confidentiality, assignment and
advising on PPSA and other matters with regard to all new
assisting with the registration of security interests on, and
searches of, the PPSR; and
consulting with you as to the risk of not registering a
security interest on the PPSR (this is dependent on the credit
worthiness of your customers/suppliers and on the cost/benefit of
Winners of the 2010 Lawyers Weekly e.law Asia Pacific Box
Breaker of the Year Award and the 2009 NSW Exporter of the Year
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
While the use of cash settled equity swaps is an established part of the Australian securities market, their use in recent high profile takeovers in Australia has attracted much attention. In particular, this attention has focused on the use of swaps by bidders or potential bidders in target companies without disclosure.
An AFSL is required if a person carries on a financial services business in Australia, unless an exemption applies.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).