This report provides an update on the proposal to replace all
types of security with the exception of real estate mortgages with
a new regime known by the acronym PPS which stands for Personal
The PPS regime will replace many, sometimes inconsistent, state
and territory laws and registers. It's proposed the PPS regime
will commence in May 2010. The final form of the law is not yet
known and so it is too early to work on amended documentation and
procedures. The final form of the law and regulation should be
known early in 2009.
This scheme is endorsed by COAG (the Council of Australian
Governments) and provides for the states to refer powers to the
Commonwealth so that we have a uniform national regime. The regime
contemplates a new national PPS register where interests are
recorded. However the register will not operate like the Torrens
system to provide virtual certainty as to ownership and security
Generally the PPS regime will apply to all
security interests in all kinds of tangible and intangible property
with the exception of real estate. For example, PPS will cover
chattels, goodwill, copyrights and intellectual property. The PPS
regime will replace security interests such as charges, chattel
mortgages, Romalpa clauses, hire purchase agreements, pledges, and
We'll have to get used to the American term
"collateral" because this is
used by the legislation to describe the security that is provided.
Collateral is categorised into consumer property, equipment,
inventory, chattel paper, documents of title, intangible property
(which includes accounts receivable), tangible property,
intellectual property, investment instruments (eg shares and
interest in a managed investment scheme), currency and negotiable
We will also have to get used to
"attachment" which arises when
value is given by the lender or a security interest has been
created, and "perfection" which
occurs when the security interest is registered or the secured
party takes possession of the collateral. There will be new
priority rules to determine which of a number of competing
interests will rank first.
The legislation will change both documents and lending
procedures. Significant staff training will be required. There will
also be changes to marketing material and credit concepts.
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.
By Jon Denovan
t (02) 9931 4725
t (02) 9931 4738
t (03) 9612 8282
t (03) 9252 2583
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