Publications / Finance
In June 2010, we alerted you to the implications of taking security under the new Personal Property Securities Act 2009 (PPSA). Please click here to view the article dated 29 June 2010.
At the time, it was expected that the PPSA would be in full force by May 2011. However, recommendations from the Council of Australian Governments Business Regulation and Competition Working Group to defer the commencement date from May 2011 to October 2011 have been accepted.
There appears to be two reasons for the extension:
- in response to requests from industry (including key stakeholders such as major banks) to enable more time to prepare for the changes, and
- only four jurisdictions - the Commonwealth, New South Wales, Australian Capital Territory and Northern Territory - had enacted all necessary legislation to enable delivery of the register.
Of the legislation that has been passed by the Commonwealth, the Personal Property Securities (Corporations and Other Amendments) Act 2010 will repeal the provisions of the Corporations Act dealing with the registration and priority of company charges. Consequential amendments to the Corporations Act will also be made with effect from the time the PPSA commences.
Despite submissions from lawyers and industry, the amendments to the Corporations Act effectively mean that security interests granted by companies that are perfected by registration must be registered within 20 business days after the relevant security agreement came into force. Failure to register within the 20 business day period may mean that the security interest will be void in the administration or liquidation of the company.
The new provisions replace the current ‘45 day rule’ and change the previous position that, under the PPSA, there would be no time limit for registration of most security interests. Previously, the only time limit for registration under the PPSA was that a Purchase Money Security Interest (PMSI) be registered within 15 business days (other than a PMSI in relation to inventory, which must be registered before the grantor obtains possession of the security property).
We will continue to update you on significant developments in the lead up to the PPSA October 2011 commencement date.
Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.