The Personal Property Securities Act 2009 (Commonwealth) (“the PPSA”) is expected to commence on 31 October 2011 (although its commencement has been deferred already at least once because not all jurisdictions were ready in May 2011).
The new regime raises a number of questions – some easily answered, others that are quite complicated.
This first blog on the PPSA will only deal with the basics. Further blogs will deal with more complex questions as the need arises, and as cases provide us with some guidance as to interpretation.
The PPSA sets up a new scheme of registration of security interests in personal property.
The Act provides:
- Personal property is any form of property other than land, buildings or fixtures which form a part of that land. It can include tangibles such as cars, art, machinery and crops; as well as intangibles such as intellectual property and contract rights (including retention of title rights).
- A personal property security is when a secured party takes an interest in personal property as security for a loan or other obligation, or enters into a transaction that involves the supply of secured finance
- For the establishment of a single national online register to replace a number of state securities registers and the ASIC register of charges granted by corporations
- It is not compulsory to register on the PPS Register. However, registration of a financing statement enables a secured party to ‘perfect’ its security interest.
- A perfected security interest will:
- have priority over an ‘unperfected’ security interest
- survive the grantor’s insolvency/bankruptcy, as an unperfected security interest will not; and
- in some cases survive the sale of the collateral, as an unperfected security interest will not.
From 31 October 2011, any security interest in personal property should be registered at the Personal Property Securities Register.
The Federal Attorney-General is expected to confirm the commencement of the new regime some time in September 2011.