It is just over one month since the Personal Property Securities
Register (PPSR) commenced operation. In this E-Alert, we share our
experiences so far.
PPSA in a nutshell
The Personal Property Securities Act 2009 (Cth) (PPSA) affects
all businesses that hold security interests in personal property.
Businesses which do not have possession or control of personal
property used as collateral (e.g. stock and equipment supplied or
hired to customers) should have a security agreement in place that
satisfies the requirements of the PPSA (e.g. updated trading terms)
and should register their security interest on the PPSR.
Businesses that do not take these and other steps may not have
the ability to seize or otherwise deal with their personal property
upon a debtor's default and will have limited or no rights to
the personal property if their customer or borrower suffers an
Traps when searching the PPSR
We recently searched the PPSR to check that two fixed and
floating charges had migrated from the ASIC Register to the PPSR.
We searched the PPSR by ACN and by company name but neither search
resulted in any security interests over the company being
By trying other methods we were able to track the charges down.
The PPSR Registrar has since acknowledged that the problem is
widespread and is attempting to resolve the issue. We can help you
in the meantime.
Tips when registering a security interest
It is vital to do registrations carefully; otherwise your
business may not have security over the relevant assets. For
example, your customer or borrower may operate its business through
a trust. In those circumstances, the trustee is the legal entity,
not the trust itself. We can advise how best to register security
interests over personal property held by trusts.
The registration process raises various legal questions about
the security interest and ticking the wrong box can have serious
consequences. For example, it is necessary to indicate whether or
not the security interest is a Purchase Money Security Interest
(PMSI). A validly registered PMSI will take priority over prior
registered security interests (in most circumstances). However, a
registration that indicates the security interest is a PMSI in
circumstances where it is not a PSMI will be invalid.
We can attend your premises and take you through the
registration process step-by-step. We have found it to be a very
effective way of explaining the complex issues involved.
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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