A Complete Guide To The Personal Property Securities Act 2009 (PPSA)
The Personal Property Securities Act 2009 (PPSA) has comprehensive approaches and consequences for those conducting business in Australia. All businesses need to register (perfect) their security interest under the PPSA. Ownership of goods no longer offers sufficient protection now.
This article will cover everything about The Personal Property Securities Act (PPSA) and other aspects related to it.
What is PPSA?
PPSA is a piece of legislation established by the Personal Property Securities Act 2009 (Cth) (PPSA) and the Personal Property Security Regulations 2010 (Cth) that regulate and administer the Personal Property Security Register, which is the register of security interests. Personal property includes:
- Bank accounts
- Intellectual Properties (such as copyright, trademarks, patents, and design rights),
- Private commercial licenses
- Assigned rights
- Other financial properties
It excludes land, buildings, and fixtures attached to the property. The Personal Property Security Register records all information related to security interests that are held in or over property by the business. Failure to register a security interest has certain consequences for the secured party if the other party who provides the security interest becomes insolvent.
What Is A Security Interest?
The PPSA has provided two broad categories of security interest that explain its functional definition.
An In-Substance Security Interest (Section 12(1))
An in-substance security interest (section 12(1)) is an interest in personal property that secures the payment or performance of an obligation. For example, a security interest over manufactured roofing material supplied to a retail hardware store on the account.
A Deemed Security Interest (Section 12(3))
A deemed security interest (section 12(3)) is a security interest that includes the interests of the following:
- Transferee under a transfer or an account
- A consignor who delivers goods to a consignee under a commercial consignment
- A lessor or bailor of goods under a PPS lease
Why is The PPSA Important?
– Perfection of security interests under PPSA is crucial to surviving the insolvency of the grantor. An unperfected (not registered) security interest will be void in the case of the occurrence of any insolvency events. For example, the grantor is made bankrupt, or an administrator is appointed (with certain exceptions applied).
– An unperfected security interest may also be extinguished if a grantor deals with any third party. Generally, a perfected security interest has more priority over an unperfected security interest in PPSA. Always review all the documents used in your business to determine if any security interest is or may be granted. If security interests are granted under those documents, you should make necessary amendments in your account for the PPSA and follow the required procedures to perfect them.
What Property Does Security Interest Apply To?
– PPSA act defines property as all properties (other than land) a right, an entitlement, or an authority that is specifically granted by the commonwealth, state, or territory and deemed as not personal property. The Personal Property Securities Act (PPSA) provides for a security interest granted over future property and proceeds from collateral dealings. For example, if a security interest is registered over one of the company’s properties, then as the company starts to acquire more machinery, that security interest could be titled as ‘after-acquired property’.
Here at Ledlin Lawyer, our law experts ensure all your needs related to PPSA regulations are fully identified and protected. Call +61 28488 3389 to speak to our legal professionals or send your queries at firstname.lastname@example.org