Personal Property Securities Act & migration of existing security interests
The Personal Property Securities Act (PPSA) has been deferred until 11 October 2011.
The PPS regime replaces 70+ registers across 9 jurisdictions that currently operate in relation to the registration of security interest over personal property. Migration of existing security interests will commence some weeks before the launch date of Tuesday, 11 October 2011.
It is important to check existing security interests that may be currently registered. Complete documentation of existing security interests will ensure a security interest remains perfected under the new system. Remember, if a security interest is not perfected according to the new requirements of the PPSA, it may be defective and you may lose your entitlement to the security interest.
What will the PPSA cover?
The PPSA covers security interests in personal property only. Personal property covers tangible property (for example motor vehicles, plant and equipment, inventory, crops and livestock) and intangible property (for example intellectual property, patents and some licenses). It does not cover security interests in land or water rights.
A ‘security interest’ is defined as an interest in personal property arising from a transaction that, in substance, secures payment of money or the performance of an obligation.
In order to retain enforceable rights to the personal property under the new PPSA system, a security interest must attach to property and be perfected through registration on the online Register within a prescribed time frame and with completed documentation.
Migration of existing security interests
If you have a security interest that is registered on an existing register, it will be automatically migrated across to the new PPS Register. For example, a charge on the Register of Charges administered by the Australian Securities and Investments Commission will be automatically migrated across to the new PPS Register.
Migration will commence at least 28 days before the registration commencement time, 11 October 2011. It is very important to note that the registration will be effective from the registration commencement time (i.e. 11 October 2011) and not from the migration time.
Checking existing security interest documentation
It is very important to check all currently registered and existing security interests in order to ensure the documentation is complete. Under the new PPSA regime, if some requisite information is missing, such as the correct collateral class, the security interest may be unperfected and you may, as a secured party, loose priority over your security interest.
The new PPSA is complex and it is important to prepare and plan for its forthcoming implementation. We suggest you review all existing arrangements carefully and ensure all relevant documentation is corrected or amended as required.
For further information on the PPSA, please contact one of our Corporate Advisory lawyers.
Authors: David Boyall & Susan Reece Jones