THIS CHECKLIST IS DESIGNED TO ASSIST YOU IN IDENTIFYING IF THE
PPSA WILL IMPACT ON YOUR BUSINESS AND HOW YOU CAN PREPARE PRIOR TO
THE PPSA COMING INTO EFFECT
DOES THE PPSA AFFECT YOUR BUSINESS?
In the course of your business :
Do you supply or have supplied to you goods on credit, either
on retention of title terms or on the basis of receiving/providing
some form of security over the goods?
Do you enter into documents that include charging clauses or do
your standard documents include clauses that are intended to give
you some form of security over non-real estate assets?
Do you supply credit/finance (including vendor finance) secured
by non-real estate assets or borrow funds secured by non-real
Do you lease or enter into similar arrangements for a period of
more than one year or for an indefinite term?
Do you or any of your customers factor their debts?
Are you party to any commercial consignment arrangements?
Do you provide or enter into hire-purchase arrangements?
Do you take or provide security over goods by way of
Do you take or provide security over intellectual
Do you acquire debts or are you involved in receivables
Do you currently take or grant any form of security over
non-real estate assets to secure the performance of obligations, eg
under franchise arrangements, shareholder agreements or joint
If you have answered YES to any of the above questions, the PPSA
is likely to apply to your business.
WHAT ARE THE CONSEQUENCES OF NOT REGISTERING YOUR SECURITY
INTEREST ON THE PPS REGISTER?
If a person holds a registered security interest in assets over
which you have granted security, that person will take priority
over any other unregistered interest in those assets.
If you supply goods on retention of title or lease terms and
fail to register your interest on the PPS register then on
insolvency those assets will vest in your customer and may be dealt
with without reference to your security or your interest in the
asset (even if you hold title to the asset).
If your customer deals with the asset over which you are
seeking to take security in the ordinary course of their business,
those assets will be able to be disposed of and your interest in
the asset will be extinguished (even if you hold title to the
In circumstances of insolvency or administration of your
customer, you may cease to be a secured creditor (or have security
by way of ownership of the asset) and end up being only an
unsecured creditor of the customer.
Once the PPS regime commences on 30 January 2012 existing
security arrangements may not provide you with the advantages they
Ownership of/title to an asset will not provide you with
protection against unauthorised dealings with the asset. the
registers on which you may currently register your security
interests will be replaced by the PPS register.
The new PPS regime may have significant negative consequences to
the value of your business with potentially adverse flow on effects
in relation to cash flow, profitability and relationships with your
WHAT SHOULD YOU DO TO AVOID THESE CONSEQUENCES?
Identify a key executive or team to take responsibility for
consideration of how the PPSA affects your business.
Seek expert advice as to the operation of PPSA and how it will
impact on your processes, procedures and documentation.
Determine what changes should be made to your processes,
procedures and documentation to ensure your security and ownership
rights are protected under.
Implement appropriate changes, including education of all
relevant staff as to the operation of PPSA, and ensure that
appropriate processes, procedures and documents are used from
commencement of the PPSA regime on 30 January 2012.
Thynne & Macartney is able to assist you in respect of the
above matters. Please contact our PPSA team if you require
assistance to prepare for the PPSA.
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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