Canada: Dude, Where's My Debtor?: Changes To Ontario's Personal Property Security Act

On December 31, 2015, long-awaited1 amendments to the conflict of laws provisions of the Personal Property Security Act (Ontario) (the Ontario PPSA) came into force. The amendments are intended to bring clarity to the rules for determining the debtor's location under the Ontario PPSA—the singular test that decides the applicable provincial laws that govern the taking of security over certain classes of intangible assets (including accounts receivable, deposit accounts, and contractual rights) and certain mobile goods, and consequently, the appropriate jurisdictions in which secured parties should register financing statements.

What You Need To Know

  • As of December 31, 2015, secured parties need to consider new criteria when ascertaining the location of the debtor for purposes of determining where to register in order to perfect security over the affected classes of collateral. Under the new rules, a debtor's location may generally be determined by reviewing the debtor's organizational documents or by searching a public registry.
  • A security interest perfected prior to December 31, 2015 will continue to be perfected until December 31, 2020 or until the expiry of the registration if expiration is set to occur prior to December 31, 2020 . However, if between December 31, 2015 and December 31, 2020, the secured party takes the steps necessary to perfect under the new rules, the security interest will be deemed continuously perfected.    
  • Because the other provinces are not yet instituting corresponding amendments, secured parties may still be faced with searching and registering security in multiple jurisdictions in cases where, as a result of competing provincial conflict of laws rules, it remains uncertain which province's law governs.

The Old Rules

The Ontario PPSA provides that the laws of the jurisdiction where the debtor is located govern the validity, perfection and priority of (i) a security interest in intangibles and goods of the type that are normally used in more than one jurisdiction if the goods are equipment or inventory leased or held for lease by a debtor to others, (ii) a non-possessory security interest in an instrument, negotiable document of title, money and chattel paper and (iii) a security interest in investment property by registration.

Section 7(3) of the Ontario PPSA sets out the rules for determining where the debtor is located. Prior to December 31, 2015, the formulation of Section 7(3) provided that: "a debtor shall be deemed to be located at the debtor's place of business if there is one, at the debtor's chief executive office if there is more than one place of business, and otherwise at the debtor's principal place of residence." Unhelpfully, the terms "chief executive office" and "principal place of residence" are not defined and therefore necessitated a factual determination on the basis of the circumstances relating to each particular debtor. In many cases, this factual determination was not a straight-forward analysis, and the attendant uncertainty frequently led to secured parties conducting searches and registering financing statements in multiple jurisdictions in cases where the debtor had connections to multiple locations in order to address the possibility that the "chief executive office" may be found to be located in any one of them.

Consider, for instance, a limited partnership formed in Alberta (with a small office in Calgary) with senior management located in Toronto but whose principal asset is a power project in British Columbia.  In this scenario, under the old rules a prudent senior secured lender would likely have registered financing statements in all three provinces.

The New Rules

As a result of the amendments to Section 7(3), the debtor's location will now be determined as follows:

Organization Type

Location of Debtor

An individual

The jurisdiction of the individual's principal residence

A partnership (other than a limited partnership)

The jurisdiction of law governing the partnership agreement

A corporation, limited partnership or other organization organized2 under provincial or territorial law

The province or territory of incorporation, formation or organization, as applicable

A corporation organized under federal law

The jurisdiction where the registered office or head office is located3

An organization registered under U.S. state law

The state or territory in which the corporation has been registered

An organization registered under U.S. federal law

The (i) state designated by federal law, (ii) state designated by such organization, or (iii) if sub-clauses (i) and (ii) do not apply, the District of Columbia

Trustees of a trust

The jurisdiction (i) of the governing law of the trust agreement, or (ii) if sub-clause (i) does not apply, in which administration of the trust is principally carried out

If none of the above clauses apply

The jurisdiction where the chief executive office is located.


In many cases, the amendments will bring certainty to the determination of the debtor's location under the Ontario PPSA. Under the new and improved Section 7(3), in the example of the limited Alberta partnership given above, the relevant governing law for taking security in respect of the limited partnership debtor would be Alberta.

The amendments also include transitional rules, the most significant of which are described below.

(1) A secured party may continue to rely on the old (i.e., pre-December 31, 2015) rules in respect of security agreements entered into prior to December 31, 2015 (a Prior Security Agreement), including in respect of any amendment, renewal or extension of that Prior Security Agreement made on or after December 31, 2015 so long as the amendment does not include new classes of collateral not covered under the original collateral description.

(2) A security interest perfected under the rules prior to December 31, 2015 will continue perfected until the earlier of (i) the date of expiry of the registration, and (ii) December 31, 2020.

(3) A security interest perfected under the rules prior to December 31, 2015 will continue perfected beyond December 31, 2020 (to the extent perfection would not otherwise cease before such date) so long as the security interest is perfected under the new rules before December 31, 2020.

The Upshot

The new amendments to the Ontario PPSA take a big step forward in terms of remediating the uncertainty under the old rules for determining a debtor's location under the Act, and accordingly, which law governs the creation and enforcement of security interests in collateral. Unfortunately, given Canada's fractious provincial system where each jurisdiction has its own personal property security legislation,  the amendments are effectively swapping one brand of uncertainty for another. Looking back at our example, while the new rules make it clear under the Ontario PPSA that the debtor's location, and thus the applicable law, would be Alberta, the conflict of laws provisions of the Alberta PPSA still point to the jurisdiction where the debtor's chief executive office is located, leaving secured creditors with the same ambiguity the Ontario amendments were intended to remove. Until the other provinces catch up with Ontario and enact corresponding amendments, the issue of duelling conflict of laws provisions between provinces will remain, as will the less than optimum "shotgun" approach to searching and registering in all jurisdictions with a credible claim to the chief executive office.  

From a cross-border perspective, the amendments might be seen as an attempt to harmonize the Ontario PPSA rules with Article 9 of the Uniform Commercial Code in the U.S. under which the debtor location rules follow a truly "one-stop-shopping" approach.  In contrast, however, the new rules under the Ontario PPSA only apply to certain asset classes and the location of collateral will still be relevant for tangible assets such as inventory, equipment and other goods, and for possessory security interests in an instrument, a negotiable document of title, money and chattel paper.

What You Need To Do

(1) Because of potential competing conflicts of laws rules between two or more provinces, secured parties need to consider the applicable rules in each relevant jurisdiction when determining where to search and file registrations.

(2) In respect of Prior Security Agreements for which the security interest will continue beyond December 31, 2020, secured parties must use the period between now and December 31, 2020 to perfect under the new rules to ensure the security interest does not lapse by operation of the transitional rules.

(3) In the event a collateral description under a Prior Security Agreement is amended after December 31, 2015 to include new classes of collateral, the grandfathering provisions of the transitional rules will not apply and the post-amendment regime will need to be followed to ensure security is properly taken over any such new collateral.

(4) For security agreements entered into on or after December 31, 2015, secured parties should include covenants that require the debtor to give notice of any change of its location as determined in accordance with the new rules. Secured parties should also review Prior Security Agreements (and/or loan agreements to which they relate) to confirm they contain similar covenants—and where they do not, consider amending accordingly.   


1 The amendments were passed in 2006, but proclamation of their coming into force was delayed in hope that the other provinces would make the same changes to their PPSAs. Notwithstanding that the other provinces have failed to follow suit to date, the Ontario government has proceeded with issuing the proclamation as one component of a greater effort to make Ontario a more business-friendly jurisdiction and to modernize the laws dealing with commercial activity.

2 Organized meaning incorporated, formed, continued, amalgamated or otherwise organized.

3 Registered or head office location is identified as set out in its publicly filed constating documents or in its bylaws if not set out in constating documents.

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.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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