With less than 12 months before the Personal Property Securities
Act's transitional provisions end, you should ensure that any
security interests you have been granted that were created before
30 January 2012 are properly protected on the PPSR.
Partner Paul Cullen and associate Llon Riley outline the
transitional provisions in place and explain the consequences of
failing to properly protect your transitional security
What does this mean for you and your
The Personal Property Securities Act 2009 (Cth) (PPSA)
introduces substantive changes to the laws that govern security
interests in personal property and the methods used to protect
them. Merely taking a security interest over another person's
property or retaining title to your own property will no longer be
adequate to protect your interests. In many instances, you will
need to take the additional step of registering that interest on
the Personal Property Securities Register (PPSR).
The PPSA's transitional period will end in less than a
year. The consequences of not protecting your interests before the
end of the transitional period can be significant.
If you have been granted a transitional security interest, you
will need to ensure your interests will continue to be protected
beyond the end of the transitional period.
The PPSA's transitional provisions
The PPSA creates a two-year transitional period to provide
temporary protection for security interests created before 30
January 2012. However, this period of protection will end on 30
The transitional period allows you to adjust to the new PPSA
environment and gives you time to properly protect your
transitional security interests. In many instances, this means
registering those interests on the PPSR.
While some transitional security interests have already been
registered on the PPSR through the PPSA's migration process
(for example, charges registered on the ASIC Register of Company
Charges), many others have not. These interests will need to be
registered to ensure they are properly protected from 30 January
2014. Examples of these types of transitional security interests
leases and hiring arrangements;
share and unit mortgages (particularly those granted by
retention of title supplies;
equipment or chattel mortgages;
charges or mortgages granted by individuals (including all
asset charges); and
security interests granted by foreign entities where the
secured property is located in Australia.
When the transitional period ends, all of the provisions of the
PPSA (including the priority, extinguishment, enforcement and
insolvency rules) will apply to your transitional security
interests. If those interests are not registered (or perfected by
another means), you risk:
your security interests ranking behind another creditor even
though your interest was created first. This will be the case even
though you retain ownership of the secured property; and
your security interest vesting in (transferring to) the person
or entity who granted you the interest if they become insolvent. If
this happens, you will only have rights as an unsecured creditor.
Where you lease or retain title to property, the vesting rules will
result in your title to the property transferring to the insolvent
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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