The “Personal Property Securities Act” (PPSA) is now here! This is being hailed by some as the most significant change to the law in Australia for businesses since the introduction of GST and now that it has started you need to make sure you are ready.
If you supply goods on credit and want to retain title to the goods until you are paid, you will now need to register that interest on the Personal Property Securities Register (PPSR) for your rights to be effective. If you have conducted business with a retention of title clause in your agreements, the clause alone without registration will now be ineffective. 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.
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. In the event of insolvency, your interest could be lost to a liquidator secured creditor if you haven’t registered your security interest on the PPSR.
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.
Contact us and we can explain in further detail what you need to do now to protect your security interest.