By now you may have heard about the upcoming amendments to the
Personal Property Security Act (Ontario) (the PPSA) coming
into force on December 31, 2015. Our focus is on the practical
implications of those changes and how they are going to affect
secured parties. These amendments change the rules in Ontario for
determining the "location" of a debtor and will have
implications for the validity, perfection and priority of security
interests perfected by registration under the PPSA.
Under the new PPSA rules, the location of a debtor is determined
based on the nature of the debtor in question. Specific rules are
set out to address the location of individuals, corporations,
partnerships, and other types of debtor, based generally on the
information available in public filings. The result of these
changes may be to shift the location of existing debtors for the
purposes of the PPSA. Accordingly, transition rules have been
provided to allow existing secured parties to maintain the
perfection and priority of their existing registrations.
The introduction of the new PPSA location rules gives rise to
several practical implications for secured parties.
Consider whether existing security interests are
affected by a change in debtor location. Secured parties
and their counsel should review their existing security agreements
and registrations to determine whether new registrations may be
required to maintain perfection under the new rules, especially
where the term of lending arrangements extends beyond the 5-year
transition period (i.e. loans that extend past December 31, 2020).
A secured party which registers in accordance with the new rules
before the expiration of the transition period will be deemed to be
Keep the new rules in mind for amendments and
refinancings. Be mindful to avoid simply duplicating prior
deals and reusing existing registrations. Although the
transition rules allow a secured party to maintain perfection under
the old rules following certain amendments and extensions, each
amendment and refinancing should be taken as an opportunity to
ensure the security package is in compliance with the new PPSA
rules before the expiration of the 5-year transition
Apply the new location rules for new security
interests... Starting on January 1, 2016, PPSA financing
statements should be registered in accordance with the new debtor
...but consider filing under the old rules - even after
December 31, 2015 - to avoid conflicts of laws issues with other
provinces. As Ontario is the only province to adopt new
debtor location rules, the location of the debtor's chief
executive office is still relevant to conflicts of laws analysis
when other Canadian provinces are involved. In situations where the
location of the debtor under the new Ontario rules and the location
of the debtor under PPSA legislation in place in other Canadian
provinces is different, registration in accordance with the rules
of both jurisdictions may be required.
Conduct PPSA searches under both the old rules and the
new rules. Although Ontario PPSA filing practice will
change after December 31, 2015, existing registrations made under
the old Ontario PPSA rules may continue to be effective until
December 31, 2020. As a result, for at least the next five years,
when conducting searches in the Province of Ontario (and elsewhere)
secured parties and their counsel will need to consider both the
old and the new rules to ensure that all prior registered security
interests are detected. 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.
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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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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