On 30 January 2012 the Personal Property Securities (‘PPS’) regime came into effect. The new regime will affect most businesses, especially those engaged in financing arrangements such as financial institutions.
Up until now Australia has had different laws and registers in each State and Territory. The PPS regime brings together the different Commonwealth, State and Territory laws and registers under one national system, which is regulated by the Personal Property Securities Act 2009 (Cth) and an online PPS Register managed by the Insolvency Trustee Service Australia. The Register will be web based, available in real time and accessible 24 hours a day, 7 days per week. Anyone will be able to register ‘personal property’, which has a defined meaning, on the register.
The reforms will have a significant impact on leasing businesses and businesses that provide finance through the purchase of receivables. It will also have a big impact on manufacturers and suppliers, who commonly sell their products on a ‘retention of title’ basis. Manufacturers and suppliers will need to register their security interest on the PPS Register to ensure that all their security arrangements remain effective. The PPS regime fundamentally changes the rules in relation to the enforcement of security interests. There will be a revised order of priority of security interests dependent, in part, upon the date of registration of the interest on the register. As a result, businesses that fail to take into account the new regime risk losing property, including property to which they have title, should a party with which they have dealings enter into liquidation.
Financial institutions have spent a great deal of time and money reviewing their lending and security documents over the past year in anticipation of the commencement of the PPS regime. You can expect that their documents and procedures will have been changed to maximise the protection of their interests under the PPS regime, this is likely to be to the detriment of those who have potentially competing security interests that are non-compliant with the PPS regime.
It is essential, therefore, that you or your trusted professional advisors conduct a review of the risks of doing nothing to take account of the commencement of the PPS regime, as well as the advantages of becoming fully compliant across your business.
Aitken Partners is able to assist you in relation to the PPS regime, including reviewing your contracts and advising you about the regime and how it may impact on your business.
Please contact us for a copy of our information booklet.