The Personal Property Securities (PPS) Reform is one of the most significant regulatory changes affecting business this year. It changes the way people take security over assets other than land and protect and enforce the security. PPS Reform bring the different Commonwealth, State and Territory laws and registers under one Commonwealth system. There will be a single, national, online PPS register. The aim of the PPS Reform is to simplify the 70-80 pieces of legislation that currently govern the area of Security Interests into one cohesive system.
May 2011 is the commencement date, the new provisions apply to all new Security Interests entered into after this date. Existing Security Interests must be registered within 24-26 months of the commencement date and transitional provisions will cover this period.
Businesses need to be alert to the fact that what is classified as a Security Interest has greatly expanded. Transactions and contracts that aren’t thought of currently as Security Interests may now be caught. Examples are:
- Retention of title clauses
- Supplying goods with vendor credit
- Long term (>1 year) leases
- Leaving goods on site
- Security for payment arrangements
Businesses need to identify all Security Interests they are a party to. This involves a review of their standard contracts and ordinary business practices . Security Interests must be registered under the new scheme to protect priority. Standard contracts will need to be amended and systems to protect interests put in place.
Borrowers who sign negative pledges must also be aware that they may now have Security Interests where previously they did not.
All Australian business should consider whether these changes affect them. They may still apply even where the business does not, on the face of it, believe they have anything to do with Property Security.
Please contact Bayston Group with any questions. We are happy to discuss the PPS Reforms as they affect your business, and assist you with any documentation, amendments to contracts and procedures as needed.