New Personal Property Security Legislation Update
As you may already know, the Federal Government plans to introduce a public security register pursuant to new federal legislation known as the Personal Property Securities Act (PPSA).
Whilst not all details are known at this stage, we do know that:
- the PPSA will create a public register which will commence operation in October of this year and will be used to record and manage security interests and to determine priorities of interests in or over goods.
- The register will record security interests over personal property. Not only will it cover some types of “security interests” which have never before been the subject of a public register, but it will also replace existing registers, including the Security Interests in Goods Register, ASIC registered company charges and the Register of Encumbered Vehicles (REVS).
- Once the register becomes operational, security holders must register their interests in the PPSA register to ‘perfect’ their interest over goods. A failure to do so may result in an interest not being enforceable against other competing interest holders. Registrations will be completed online and may attract a small fee.
- In some instances, security holders may register an interest over a customer, rather than each individual item sold to that customer.
- Security over ‘Vehicles’ (as defined by the PPSA) must be registered individually and with reference to an identifying number (VIN, serial, etc).
- The register will be managed by the Insolvency Trustee Service of Australia (ITSA). Once the existing registers are migrated into the new PPSA register, then ITSA will be responsible for the management of all types of securities previously covered by the other registers.
- There will be a transition period of 2 years.
Given the above, the operation of the new PPSA has the potential to affect anyone who sells goods on any form of credit, lends money, uses retention of title clauses in respect of goods sold, or hires goods to third parties. Suppliers will need to be mindful of the wording of their existing terms of trade and where necessary, ensure they are amended to give the supplier the right to register any interests with the new register, where required. Suppliers will also need to be aware of and ready for the additional administrative processes involved in complying with the new PPSA (from a registration and ‘perfection’ point of view).
If you fall into the above category of supplier, then it is an ideal time to review your terms of trade and if necessary, update them to comply with the new PPSA, as well as ensure they contain all other relevant mechanisms to secure your interests.
If you require your terms to be reviewed or need any further information on the above important topic, please do not hesitate to contact us.