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The Personal Property Securities Act and the Migration of ASIC Registered Charges

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The Personal Property Securities Act 2009 (Cth) (PPSA) commenced on 30 January 2012.

The PPSA provides for a process of data migration, where security interests including charges that previously were registered on the Australian Securities and Investments Commission (ASIC) register of charges migrated to the Personal Property Securities Register (PPSR).

Anecdotal evidence suggests that a substantial number of charges were not migrated properly and information that was contained on the ASIC register was not transferred to the PPSR. By way of example:-

  • A number of ASIC registered charges do not appear on the PPSR at all.  ASIC is currently undertaking a review of the data transferred and will notify secured parties of charges that did not migrate.  In the meantime, secured parties should consider lodging a replacement security interest in order to protect their position.
  • Information relating to companies has been migrated across by reference to a company’s Australian Business Number (ABN) which means that a search of the PPSR using an Australian Company Number (ACN) may not show any security interests recorded against a company.
    In order to address this problem, a “Find and Claim” process has been implemented so that secured parties can find and claim their associated registrations.  A similar situation has occurred with the migration of registrations relating to vehicles and vessels that can be described by more than one identification number.
  • Where a charge granted to multiple chargees (typically lenders) migrated to the PPSR, only the first noted chargee on the ASIC register has been transferred across to the PPSR whilst the other chargees have been dropped.  Early indications suggest that this may take up to six months to rectify.  This may create a situation where the lead secured party (if it was not the first named chargee on the ASIC register) will not receive notices from the grantor as may have been previously contemplated and agreed between the parties.
    Parties affected should consider creating a new secured party group and transferring the security interest to this new secured party group to address this issue.
  • Some security interests that have been uploaded (through a third party such as an information broker) to coincide with the commencement of the PPSR had updated address details for notifications to the secured party.  In some circumstances where the secured party had previous security interests which migrated with a former address for notification, the new address reverted back to the old address meaning that the secured party’s address detailed on the PPSR is incorrect.  In any event, secured parties should check their registered security interest to ensure that the correct address for notification is detailed on the PPSR.
  • Some charges that were discharged prior to the commencement of the PPSR were migrated across to the PPSR.  This may create a situation where a secured party will be required to provide a verification notice to chargors notwithstanding that the charge had been previously discharged. This will no doubt create confusion as well as unnecessary administrative costs for secured parties affected.

Finally, a secured party that is required to amend the registration of security interests should consider its notification obligations under the PPSA.

If you have concerns about the migration of ASIC registered charges or need advice on the PPSA, please contact Oren Polichtuk of our Corporate team on 8540 0200 or oren.polichtuk@mst.com.au.

Author: Oren Polichtuk

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