All business owners need to know that key aspects of how they deal with their assets and liabilities have forever changed.
On 30 January 2012, the Personal Property Securities Act 2009 (Cth) (‘PPSA’) came into force. A ‘security’ is defined broadly, covering both tangible (eg machinery) and intangible (eg design rights) assets.
The new Personal Property Securities Register (‘PPSR’) creates a single, national registry for all personal property securities (excluding real estate such as land or anything permanently attached to land, such as buildings), in place of the previous system of several national and state and territory based registries.
Business owners may be affected if they:
• Offer their personal property assets as security under a transaction, for example, as collateral for a loan;
• Receive goods on credit terms, or under a hire-purchase agreement;
• Deal regularly with suppliers or the assets of another business generally, for example, a manufacturer of goods which receives materials from several sources; or
• Lease personal property to or from another party.
The PPSR covers all personal property transactions that were previously considered a form of security, such as mortgages over motor vehicles or charges in company property.
However it now also covers transactions not previously considered as a form of security, such as certain:
• Retention of title agreements;
• Leases; and
• Financing agreements.
It may seem tedious, but a little due diligence now may save a costly lesson later.
It is important to review documents such as equipment leases, hire agreements and retention of title agreements as they will likely require revision for compliance with the new system. Many of these documents will need a further document to be attached – generally called a General Security Agreement.
Goodman Law, Canberra law firm can assist business owners in:
• Understanding the new terminology under the PPSA;
• Conducting an audit of securities held, or given;
• Checking the effective migration of existing securities, for those who previously held, or gave, securities under one of the old systems;
• Drafting or updating key documents, to ensure that security interests are enforceable under the new PPSA system;
• Registering a security interest on the PPSA, or the removal of a security interest; and
• Advising in relation to asset restructuring to optimise the protection and enforceability of security interests.