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The Personal Property Securities Act 2009 (Cth) (PPSA) is relatively new legislation about personal ownership in Australia that came into effect on 30 January 2012, replacing over 70 existing national, state and territory laws. It brings dramatic changes to the way security is taken over personal property and will impact almost all individuals and businesses that are:

  •  Financiers
  •  Selling goods on credit (i.e. retention of title)
  •  Leasing plant and equipment, motor vehicles or other assets
  •  Providing goods on consignment
  •  Trying to refinance, raise capital or are in the market (trade sale)

The PPSA establishes rules for creating valid and enforceable security interests, priorities between competing interests, when a security is enforceable in insolvency and when personal property is acquired free of a security interest.

Those who do not understand the new system or who fail to follow the provisions of the new Act, may risk losing their claim to assets they otherwise may consider that they own. Title is not relevant under the Act. Individuals, financiers and businesses must set the wheels in motion now and seek advice to mitigate risk and to ensure the interests of their business are protected.

The PPSA established a new Personal Property Securities Register (PPS Register) which replaced a number of registers, such as the ASIC Changes Register. The PPS Register also allows people to register their interests in personal property, which were previously unable to be registered. If you do not register, you may not be able to enforce your interest.

Personal property includes all types of property other than land, fixtures, water rights and some statutory licenses. For example, cars, boats, equipment, intellectual property, shares and debts are all personal property.

A security interest is an interest held over personal property, which is used to secure the performance of an obligation.

A security interest gives the person who holds the security interest certain rights upon registration in the PPS Registry in relation to the property. For example the right to repossess property if a debt is not paid.

Common arrangements subject to security interests include charges over a company, chattel mortgages, conditional sale arrangements (for example, retention of title arrangements), hire purchase arrangements, consignments and leases of goods.

The PPSA fundamentally changes the way we think about security over personal property, and to some extent, does away with the concept of “ownership”. Failure to secure an interest in personal property in the PPS Register may result in you or your business having no claim over an asset in insolvency, even if you own it.

The PPSA raises serious risks for many Australian businesses. Business owners and directors should understand that usual asset protection and separation vehicles and structures of entities may not protect your assets from the reaches of the PSSA.

To ensure you are PPSA compliant, businesses need to:

  •  Review their business group structure and arrangements between group entities
  •  Review their terms of supply and trade, as well as financing arrangements and other a ected contracts
  •  Identify assets a ected and transactions that need to be registered
  •  Redraft standard terms
  •  Recommend new policies and processes concerning the requirements for registering transactions and associated documentation
  • Check that any security interest registered against them or their business does not exceed expectations.

If you would like further advice please don’t hesitate to contact us on 9375 3411 to make an appointment.



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