BE PREPARED FOR THE INTRODUCTION OF THE PERSONAL PROPERTY SECURITIES REGISTER IN OCTOBER 2011
01/08/2011
The new Personal Property Securities Register ("PPSR") is due to commence operation in October 2011. All individuals, companies and financiers should be aware of its operation and its effect on charges and securities over property.
Soon if you take any kind of security over property other than land you will need to register your security under a new registration scheme that will give your security priority over other later securities.
The PPSR will be a Commonwealth register of all "security" relating to "personal property". The PPSR will be managed by the Insolvency Trustee Service Australia ("ITSA") which currently operates the bankruptcy procedures.
The "personal property" in the PPSR is defined as property other than land (including some statutory licences).
The "security interest" is defined to include transactions involving:
- company charges
- chattel mortgages
- conditional sale agreements
- sales on credit which include a retention of title clause, and
- hire purchase agreements.
The security interests relate to both companies and individuals.
This means that from October 2011 all interests subject to one or more of the above securities should be registered on the PPSR. It means a company charge will no longer be registered with ASIC and the New South Wales Fair Trading Registered of Encumbered Vehicles (REVS) will cease to exist.
The PPSR will be searchable so that any prospective party to a transaction involving a security interest will be able to search the PPSR to determine if there are any existing security interests that would otherwise have priority.
Generally speaking, an earlier security interest registered on the PPSR will have priority over a later registered security interest or unregistered security interest. The effect is that if a party fails to register a security interest it may lose priority to a later registered security interest. For example, if a financier fails to register a company charge and a later charge is registered, the later charge may have priority if the company is put under external administration.
The above is an introduction to the operation of the PPSR and we will provide you with further updates in the next few editions of our newsletter to ensure you are appraised of the function and importance of the PPSR.
In the meantime, if your business regularly uses securities of the kinds listed you may need to prepare for the new legislation. For help with that preparation or if you have any questions in regard to the PPSR, please contact David Nicoll at TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.