The Personal Properties Securities (PPS) Register in Australia is scheduled to open for business on 31 October 2011. The PPS Register will be an electronic data file stored on government computers and accessible via the internet. (Access and usage conditions and fees will apply.)
A personal property security exists when a company, individual or other entity takes an interest in personal property as security for a loan or other obligation, or enters into a transaction that involves the supply of secured finance. This can include individuals or companies who are involved in: taking fixed and floating charges; long term and finance leases; chattel mortgages; retention of title arrangements; commercial consignments, and factoring.
Personal property is any form of property other than land, buildings or fixtures which form a part of that land. It can include tangibles such as cars, art, machinery and crops; as well as intangibles such as intellectual property and contract rights. (In PPS parlance an item of personal property that is pledged by its owner as security for repayment of a liability is sometimes called “collateral”.)
The individual or other entity who has an interest in personal property as security is referred to as a secured party. A secured party may enter certain identifying information about the personal property on the PPS Register. Through entering this information on the PPS Register, the secured party records and gives notice for all to see that it has a legal right, entitlement, interest or power in relation to the property.
Where there are multiple, competing or conflicting claims over personal property, the default and specific priority rules set out in the PPS Act come into play. These are complex. But in many cases the timing of the registration on the PPS Register will affect the order of priority, or ranking, of a claim.
Many of the existing registers maintained by state and territory governments and the Australian Government will be closed. These include ASIC’s Register of Company Charges, motor vehicle securities and bills of sale registers. The interests of secured parties recorded in such registers will be moved automatically across to the PPS Register, without the secured party having to do anything.
A secured party’s rights under existing fixed and floating charges will be maintained under the PPS system. A number of existing concepts will be replaced. For example, the concept of fixed and floating charges will be replaced by new concepts of security interests known as non-circulating and circulating assets respectively.
There is no need to register existing security interests immediately after the PPS Register opens. The PPS Act provides a 24 month transitional period to register existing security interests. However, these transitional security interests will need to be registered on the PPS Register within the transitional period to avoid losing priority after the end of the transitional period.
The enforcement provision of the PPS Act only applies to security interests provided by security agreements made at the time or after the PPS Register opens. For transitional security interests the enforcement rules that applied at the time of entering into the security agreement would apply as if the Act had not been enacted.
To go to the Government’s PPS information website, click HERE
Disclaimer: This document provides general information about the operation of the PPS system and does not constitute legal advice. You should seek legal or other professional advice to consider the application of PPS to your individual circumstances.