Article by Matthew Holzer
The Personal Property Securities Act 2009 (PPSA) commenced on 30 January 2012 and established a new national register for security interests in personal property.
If your organisation, as part of its standard terms of trade, has a retention of title clause or maintains a charge over goods sold, hired or delivered or holds other types of general security interests over the assets of your trade creditors you are the holder of a security interest which requires registration to ensure that your organisation’s priority against other creditors is maintained. Landlords who hold security bonds or charges over tenant’s fixtures, fittings or goods under the terms of their lease should also register their interests.
Consequences of failing to register
If you fail to register, or “perfect”, a security interest on the Personal Property Securities Register (PPSR) in accordance with the PPSA your security interest may:
rank in priority behind other security interests; and be effectively void against administrators and liquidators.
Pre-PPSA security interests that were registered on pre-PPSA registers (such as those maintained by ASIC), or which were not registrable on those registers, generally benefited from a 2 year temporary perfection period meaning a failure to register the interest did not suffer the consequences outlined above. This period is now at an end.
If your security interest is not registered on the PPSR you are exposing your organisation to the risks posed by holding inadequate security.
You need to ensure that your organisation has identified all pre-PPSA security interests, and indeed any other current security interests which may not have been registered, upon which you may wish to rely and ensure that they are registered on the PPSR.
If you have any questions regarding the PPSR or PPSA and what steps you may need to take in order to ensure compliance or require advice in relation to updating your standard terms of trade in order to ensure compliance with the PPSA please do not hesitate to contact me.