*This article contains important information about legislative changes – please give this article at least 5 minutes of your time to ensure you are across these major developments*
The new legislation entitled “Personal Property Securities Act” (PPSA) is being referred to as the most significant change to the law in Australia since the introduction of GST. However most people are still unaware of the unexpected impacts the new PPSA will have on the way business is conducted in their industry.
The PPSA is due to come into full operation on 31 October 2011 – however there are a number of things that you need to do BEFORE this date – so it is important that you get across the relevance of this legislation to your business immediately.
In this issue we set out what the PPSA is all about, how it is relevant to your business, and what you need to do right now.
*Note: Please pass this article on to anyone you know involved in business that may not be across this new legislation yet.
What is the PPSA?
The PPSA is a new act establishing a single national law governing security interests and similar transactions relating to all tangible assets (for example goods, cars, boats, crops and livestock) and intangible assets (for example trademarks, other intellectual property, licenses and accounts) except land and some statutory licenses.
Is this relevant to my business?
The PPSA will make some everyday contractual clauses unenforceable against 3rd parties unless they are registered on the new PPS register. These changes are relevant to you if you have a security interest over others, or if someone has a security interest over you/your business – for example, do you have any of these arrangements or agreements in your business?
- Supply of goods to customers on credit
- Supply of goods to customers using a retention of title clause
- Supply of services where equipment is provided
- Hire purchase agreements and/or leases
- Licenses (for example, trademark licences)
- Charges (fixed and/or floating) or mortgages
- Consignments, assignments, transfers of title
- Joint venture arrangements, alliances and/or collaborative arrangements where personal property is provided
- Shareholder agreements
- Franchise, licensing or other arrangements where a party is provided with systems, plant and equipment, goods and equipment under payment terms and/or leases
- Contracts where rights to obtain property arise on default, eg step-in rights or dilution on default clauses
- Royalty streams
- Transactions involving deferred purchase price payments
If so, the changes are relevant to you.
What is the time urgency?
When the PPSA commences in October 2011 some existing registered securities may cease to act as security, and other rights you may have (for example in a retention of title clause) may be far less effective than what it could be if you have your interests registered from the date of commencement of the PPSA. And timing is everything. If there is a priority competition between security interests on the register, time will be of the essence, so it is crucial that you are informed and act within prescribed time frames.
We have a number of fact sheets that we will be releasing over the next few weeks in case you are interested in reading about the detail. We can provide them to you sooner if you want, just send us an email to [email protected]. We also have a number of services available to take care of the detail for you.
Our services include:
- PPSA readiness audit – the quickest, easiest and most effective way of helping you to get on top of the changes with minimum time and effort. This audit is available at a very low and discounted price for our clients, and any new clients that are referred by you. In this fast and thorough process we will take your business through a checklist to help identify how the changes are relevant to your business, and identify what changes will need to be made in your business (and/or documents) before the commencement of the legislation. We will also alert you to relevant things you should be aware of going forward.
- Business agreement and documents amendment – taking care of the amendment of all of the relevant documents in your business.
- PPSA process assistance, and readiness training – helping develop processes for your business, and training your staff on these processes so you can take care of the administration yourself. (Note: we will also be providing administration services, if you want to outsource the administration)