Timely Modernization Of Ontario PPSA Chattel Paper Provisions

On May 15, 2020, the Government of Ontario proclaimed into force electronic chattel paper amendments to the Personal Property Security Act ("PPSA") that were enacted in May 2019.  The amendments provide for the perfection of security interests by control of electronic chattel paper and set out related priority and other rules, similar to the electronic chattel paper provisions in Article 9 of the United States Uniform Commercial Code ("UCC").  This is a welcome development, particularly for automotive and equipment finance companies, and is especially timely in light of the recent shift to increased electronic contracting necessitated by the COVID-19 pandemic.

With these amendments, there are two categories of chattel paper under the PPSA: "tangible" chattel paper, which is evidenced by information inscribed on a tangible medium; and "electronic" chattel paper, which is created, recorded, transmitted or stored in digital or other intangible form by electronic,