Business Solutions – Personal Properties Securities (PPS)

Gadens Lawyers has an enviable reputation of providing cost-effective practical solutions for 'business as usual' processes. Read on to see solutions to the PPS challenge.

Many Australian businesses – including yours! – could be significantly affected by changes to the law of ownership impacting all kinds of property, except real estate and a few other exceptions.

If your business ever parts with possession of goods before payment in full, you are affected by the new Personal Properties Securities Act (PPS Act) which is expected to commence in May 2011.

Example

You are a supplier of building equipment. Under your business terms, title does not pass until payment. Under existing law, the builder could not sell those goods and give good title to the purchaser. If a liquidator is appointed to the builder, the builder cannot sell the goods. After the PPS Act commences, the opposite will be the case unless you, as unpaid vendor, have notified your interest on the PPS register. You could lose your property!

Example 2

You lease equipment to a mining company. Under the existing law, there is no requirement to register or notify the existence of that arrangement in any registries. Once the PPS Act commences, you will need to notify the lease on the PPS register. Otherwise, you could lose your title to the equipment if, for example, a liquidator is appointed to the lessee or if the lessee sells the equipment to a third party.

Although financiers are most impacted by this new law, there is significant impact on many other businesses. Gadens Lawyers provides four solutions:

• face-to-face and written training for your business
• an outsourced service to document and notify your PPS interests
• provision of documents and procedures to enable your company to document and register PPS interests in-house.
• review of your current structure to identify transitional issues, including which interests you should notify on the PPS register.

You need to start considering how you will deal with PPS today. Contact Gadens Lawyers to discuss solutions for your business. Contact the partner you normally deal with or Jon Denovan, PPS Team Leader on 02 9931 4927.

More information about PPS

PPS legislation replaces over 70 pieces of legislation and over 35 registries. It provides uniform Australian law and therefore is expected to provide significant business efficiencies. The PPS regime completely replaces the existing scheme for taking security over everything except real estate and a few other exceptions.

PPS establishes a register for recording interest in virtually all forms of property including:

• goods (e.g. cars, ships, planes, mining equipment, farm machinery etc);
• growing crops;
• IP;
• contractual and other rights;
• debts;
• shares, units, debt securities;
• mining tenements.

The register will be electronic and will not involve the lodgement of a copy of a security agreement, but rather the registration of a financing statement.

In addition to what has always been considered as a registrable charge or mortgage, interests needing to be registered include:

• leases of goods (not real estate);
• hire purchase agreements;
• retention of title arrangements.

For more information, please contact:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.