After more than ten years of operation, the Personal Property Securities Act 2009 (Cth) (PPSA) and the Personal Property Securities Register (PPSR) are in line for a major overhaul.
The PPSA established a single, national set of rules of securing credit and other obligations using personal property.
The PPSA has a very long reach, covering most interests in personal property that secure the payment or performance of an obligation (regardless of the legal form and who has title to the property). Such interests include general and specific security agreements, retention of title supply arrangements, leases, hire purchase and consignments, as well as asset transfers and trusts that secure the performance of an obligation. Certain lease, consignment and debt assignment transactions are also deemed to be security interests even if they do not secure payment or performance of an obligation. The Act applies to most types of tangible and intangible property including equipment, machinery, goods, inventory, building materials, extracted minerals and hydrocarbons, crops, livestock, ships, boats, aircraft, motor vehicles, shares, managed funds, financial instruments, accounts receivable, bank accounts, contract rights and intellectual property. The only significant exclusions from the Act’s coverage are land, water rights and mining and resource tenements and some other government licences.
Businesses that do not correctly perfect security interests that they hold (usually by registering on the PPSR) run the risk of losing their rights to collateral (being the property that is subject to a security interest) if:
A draft exposure bill to amend the PPSA has been released by the Australian Attorney General for public consultation. Subject to stakeholder views and Government approval, the Amendment Bill and proposed new Personal Property Securities Regulations will be introduced to Parliament. Once Parliament approves the legislation to amend the PPSA, there will be a delay period for commencement to allow for administrative and operational change, including the build of a new PPSR.
The draft exposure bill indicates the Government intends to implement most of the recommendations of the 2015 Review of the PPSA. The 2015 Review made 394 recommendations, approximately 230 of which recommended changes to the Act while the balance either recommended no change or further consultation on particular issues. The proposed amendments are numerous and substantial.
Key changes should make the PPSR registration process easier, more flexible and less prone to user error without detracting from the fundamental objectives of the PPSA. The overhaul will:
Some of the other significant changes include:
The proposed amendments to the PPSA and the PPSR will make the legislation and the register easier to use and they should be welcomed by business and other stakeholders. However, in the short term, they may also necessitate some changes to contracts, documents and IT as well as business practices and processes.
If you would like to learn more about the changes or discuss them with one of our PPSA experts, please reach out to one of us.
Be the first to receive the latest articles, news and publications.
An increase in enforcement action by the Regulator under the Payment Times Reporting Act 2020 (Cth) (PTR Act) has been happening over the last 12 months. Companies covered as reporting entities...
In the first case of its kind in Australia, the Federal Court of Australia held that Rio Tinto-backed Queensland Alumina Ltd was correct in interpreting and applying the sanctions imposed by the...
Johnson Winter Slattery has advised early childcare management software provider Kangarootime on the sale of its Australian business to fellow industry participants Juice Technologies and Kidsoft...