Australia: Australian Personal Property Securities Act

What it means for your business
Last Updated: 4 February 2012
Article by David East, Peter Faludi and Hugo Thistlewood

Radical and revolutionary – function over form. the commencement of the Personal Property Securities Act 2009 (Cth) (PPSA) on 30 January 2012 means that australia now joins the united states, Canada and new Zealand with a comprehensive system for recognising, registering and enforcing security interests over personal property.


In very broad terms, personal property means any asset other than real property. Subject to certain statutory exceptions, it covers all forms of moveable goods as well as all forms of intangible property, like intellectual property, financial products and accounts receivable. Goods that are affixed to land are excluded. When a security interest has attached to personal property it is called collateral, the entity giving the security interest is called the grantor, the entity liable for the secured obligation is the debtor (which may also be the grantor) and the holder of the security interest is the secured party.

The PPSA applies equally to individuals and companies and to consumer property as well as commercial property.

Before the PPSA, Australia followed the English common law tradition of having a different legal treatment for the various forms of security devices used in secured transactions, ranging from the legal mortgage, the equitable fixed and floating charge and the pledge on the one hand, to title-based security devices like retention-of-title arrangements (so called Romalpa clauses) and finance leases on the other. Now any transaction that in substance has the effect of providing an interest in personal property as security for the payment or performance of any obligation (without regard to the form of the transaction or the identity of the person who has title to the property) will be treated as a security interest under the PPSA.

Key features

Key features of Australia's new PPSA regime include the following:

  • A single online national Personal Property Securities Register (PPS Register), replacing over 40 Commonwealth, state and territory security registers.
  • Most existing security interests registered on other registers (including the ASIC Register of Company Charges) will be migrated across to the new PPS Register.
  • Any existing security interests that are currently not registrable (like title retention sales and PPS leases) will be treated as transitional security interests, which will not need to be registered for up to two years after the commencement of the PPSA.
  • The PPSA includes a set of specific priority rules, which generally give priority to security interests based on the order in which they are perfected.
  • Perfection of a security is generally achieved by registration of a financing statement on the PPS Register, although perfection can also be achieved by possession or control (in the case of certain financial assets – or space objects) by the secured party.
  • A super priority status is given to a Purchase Money Security Interest (know as a PMSI, pronounced pimmsie), provided it is registered within strict time periods.
  • Some transactions are deemed to be a security interest even if they do not secure any obligation – like an absolute assignment of a book debt and any PPS lease.
  • A PPS lease will include any lease of goods for more than one year, or 90 days or more in the case of serial numbered property.
  • There are special rules and registration requirements for serial numbered property – being motor vehicles, watercraft, aircraft and registered intellectual property rights.

Key Risks

While it is not compulsory to perfect (by registration, possession or control) a security interest, for so long as a security interest remains unperfected, the secured party is subject to significantly increased risks, including:

  • If the grantor becomes insolvent or goes into administration, the secured party in effect becomes an unsecured creditor.
  • The secured party will rank in priority behind any later perfected security interests.
  • There is a greater risk of the extinguishment rules applying if the personal property is transferred by the grantor to a third party.

In order to limit the insolvency risk, any security interest granted by a company should be registered within 20 business days and generally any PMSI should be registered before the grantor obtains possession of the relevant goods.

What is Personal Property?

Industry Specific FAQS

Manufacturers, distributors and suppliers

Retention-of-title no longer provides automatic security for payment

Q:I supply goods on a retention-of-title basis and have always relied on my title to the goods as security if customers do not pay amounts owing to me. Do I need to worry about the PPSA?

A: Yes. If you fail to register your interest in the goods on the PPS Register you may lose your interest in the goods and end up simply being an unsecured creditor of the customer.

Q: How can I protect myself from the potential adverse impact of PPSA on my business?

A: If you supply goods on retention of title terms, your interest in the goods will be a PMSI. Provided you register your PMSI on the PPS Register within strict timeframes, you will have the benefit of a superior priority and your position under the PPSA will largely be the same as that applicable under pre-PPSA law.

Q: What happens if I do not register on the PPS Register?

A: While registration on the PPS Register is not compulsory, if you do not register a security interest, your ownership interest in the goods may be lost because of subsequent dealings with the goods by your customer. For example, if your customer grants a security over all its assets to its main banker, that banker will be able to deal with the goods in priority to you.

If the customer becomes insolvent and a liquidator or administrator is appointed, the liquidator or administrator will be entitled to deal with the asset free of the interest of the supplier.

If the customer sells or leases the goods, the third-party purchaser or lessee will generally take the goods free of the supplier's security interest.

Equipment hirers and asset financiers

Failure to register the interest of the hirer/financier in its own assets on the PPS Register may result in hirer/ financier losing its assets to other parties

Q: I regularly hire scaffolding to building sites and equipment to building and mining sites. Does PPSA affect me?

A: Yes. The PPSA deems certain contractual arrangements to be security interests. These deemed security interests include a PPS Lease, which extends to a lease or bailment of goods for a term of more than one year or, for serial numbered goods (motor vehicles, watercraft or aircraft), for a term of 90 days or more, or for an indefinite term.

Accordingly, if the customer retains possession of the goods indefinitely or in excess of the above periods, a PPS Lease will arise, which will be treated as a security interest for the purposes of the PPSA.

If you do not register the security interests on the PPS Register as a PMSI within strict timeframes, your interest in the goods may be lost to third parties.

Q: I am an asset financier who provides finance to customers in respect of all forms of equipment (ranging from aircraft to cranes) in the form of finance lease or hire purchase arrangements. Does my title to the assets protect me from the claims of third parties?

A: No. A finance lease or a hiring arrangement that meets the requirements of a PPS Lease (see above) will be treated as a security interest under the PPSA. For security purposes, the title of the lessor/hirer is disregarded.

Q: My standard business documents clearly restrict my customers from dealing with the assets that I lease or hire to them. Will this protect me?

A: No. The PPSA makes it clear that notwithstanding such restrictions, dealings with third parties can occur and in the absence of perfection by registration (or by other means allowed for by the PPSA) by the secured party, such dealings will be effective.

Parties involved in mergers and acquisitions

Failure to account for the impact of PPS on business acquisitions or takevoers may have a substantial negative impact on value

Q: We regularly advise clients on the acquisition of businesses and takeovers. What do I need to know about PPSA?

A: Due to the significant adverse consequences flowing from failure to comply with the PPSA, it is important that the due diligence processes undertaken by acquirers of target businesses or companies be expanded to include appropriate PPS enquiries.

Failure by the target to comply with the attachment and perfection rules provided for by the PPSA either at all or in a timely manner (or in the case of a PMSI, in accordance with the timeframes set out in section 62) may result in third parties (being either other financiers with perfected security interests, third-party buyers or lessees or insolvency practitioners) being able to deal with the target's assets.

It is therefore important that due diligence enquiries in relation to any M&A transaction extend to ascertaining such things as:

  • Is the target's business impacted upon by the PPSA?
  • Has the target sought advice as to whether or not PPSA affects its business?
  • What procedures and documents have been put in place to ensure that the business complies with the PPSA?

Q: What negative impact could the PPSA have on M&A transactions?

A: Clearly the ability of third parties to take assets of a company, which the company thought it had security over or has title to, free of such security interests or title can have a significant negative impact on the value of the business.

Receivables financiers

Transfers of debt can amount to security interests subject to the PPSA

Q: In our business, we acquire receivables from clients under receivables purchase arrangements. Does this amount to a security interest under the PPSA?

A: Yes. The PPSA treats the interest of a buyer of an account or "chattel paper" as a security interest. Depending upon the nature of your arrangements, the purchase of receivables from your clients may therefore be treated as a security interest for the purpose of a PPSA.

As a result, if you do not register your "security interest" as provided for by the PPSA, other parties may defeat your interest in those assets.

General FAQS

Q: Does the PPSA mean I need to register every single transaction on the PPS Register?

A: Under the PPSA, a financing statement is lodged in relation to security interests. Copies of documents are not required to be lodged on the PPS Register.

In certain circumstances, a master or umbrella registration can occur, which therefore avoids the need to lodge a financing statement on the PPS Register for each subsequent transaction. This may not be appropriate, however, if the subsequent transactions relate to serial numbered goods (being motor vehicles, watercraft, aircraft or registered intellectual property rights).

Q: I have a fixed and floating charge over all the assets of a company, which was registered with the Australian Securities and Investments Commission (ASIC) prior to the commencement of the PPSA. Do I need to do anything to maintain my security position in respect of that charge?

A: Security interests in place prior to the commencement of the PPSA will be treated as "transitional security interests". For a period of two years from the commencement of the PPSA, the law applicable to such security interests will be that which was in existence prior to the commencement of the PPSA.

After the expiry of the two-year transition period, if such security interests continue to be on foot, they should be registered on the PPS Register.

In relation to existing fixed and floating charges and other charges registered on the ASIC Charges Register, the data on that register (and a number of other state-based registers) should have been migrated across to the PPS Register and those securities will be deemed to be registered on the PPS Register from commencement of the PPSA.

In relation to any security interests that are "migrated" in this fashion, there should be no need for any further registration to be done on the PPS Register, however, in the case of motor vehicles and watercraft, such further registration may be required if the serial number for such asset is not already apparent from the existing registration. Also, the secured party should set up a "secured party group" and "find and claim" each of its migrated security interests on the PPS Register.

Q. Do I need to totally revamp my standard documents and procedures in order to comply with PPSA?

A: In general, no. Compliance with the PPSA is voluntary. However failure to comply with it can have significant adverse consequences to your business.

We recommend that an assessment be made as to the impact of the PPSA on your business and following the result of that assessment, appropriate amendments be made to documents and (more particularly) processes and procedures. In particular, additional due diligence (predominantly being additional searches of all parties involved in the transaction) will need to be undertaken to ascertain what security interests are already registered on the PPS Register and determining how best to ensure that your desired priority position can be implemented.

As a secured party under the PPSA, there are certain notice and other obligations that must be complied with (including on enforcement of your rights against the collateral) and your existing procedures will need to be varied to take account of these obligations.

Q: I am a foreign bank that occasionally does business with Australian companies. Do I need to worry about the PPSA?

A: Yes. In order to register a security interest, you will need to obtain a "secured party group" number from the PPS Register. We recommend that you seek advice on the impact of the PPSA from lawyers involved in transactions, where either the grantor of the security is in Australia or the assets are in Australia, to determine how best to ensure compliance with the PPSA.

Failure to comply with the PPSA can have significant negative consequences to a secured party that has not perfected its security interest under the PPSA.

In keeping with Australian market practice, facility documents should include both PPS further assurance clauses and PPS covenants from the borrower/security provider.

How We Can Assist

In relation to the introduction of the new PPS regime, we can assist you with the following:

  • For any business that relies on title-based security (including any rental or leasing businesses), undertake a PPSA review of your current business processes and documentation in order to identify relevant PPSA risks, and then to recommend changes in your business
  • processes and documentation in order to obtain maximum protection available under the PPSA
  • Review existing security documentation for any secured transactions and provide advice on what steps should be taken by the secured party to properly perfect and protect its interests under the PPSA
  • Review and recommend any amendments to standard terms-of-trade documentation, which include retention-of-title terms, so that the supplier can preserve its security position under the PPSA
  • Review and advise on any assignments or transfers of property (including any intangible property) that may now fall within the security interest concept under the PPSA and provide assistance on undertaking a cost benefit assessment of whether or not to register the security interest on the new PPS Register
  • Provide advice on how to complete and register a financing statement in a way that perfects the relevant security interest and minimises the risk that the financing statement is ineffective because it contains a seriously misleading defect
  • Prepare or advise on priority and subordination agreements between secured parties
  • Provide advice on any of the PPSA priority rules (including for migrated and transitional security interests), extinguishment rules or enforcement provisions under the PPSA.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

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”

Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions