PPSA terminology

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In Brief

The Per­son­al Prop­er­ty Secu­ri­ties Act 2009 (PPSA) was due to come into force on 31 Octo­ber 2011, how­ev­er, the Com­mon­wealth Attor­ney Gen­er­al’s depart­ment has now con­firmed that this date is not achiev­able and it is now tar­get­ing a date before 1 Feb­ru­ary 2012.

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New terminology

When it is imple­ment­ed, the PPSA will intro­duce an assort­ment of new ter­mi­nol­o­gy and con­cepts to the area of secu­ri­ty over assets. Some of the new terms include: 

Now	PPSA
chargee	secured par­ty
char­gor	grantor
secured prop­er­ty	col­lat­er­al
charge deed	secu­ri­ty agreement
fixed charge	secu­ri­ty inter­est in a cir­cu­lat­ing asset
float­ing charge	secu­ri­ty interest

The PPSA will intro­duce a new reg­is­ter where all secu­ri­ty inter­ests will be reg­is­tered. The PPS Reg­is­ter will replace exist­ing reg­is­ters, includ­ing the com­pa­ny charges reg­is­ter at ASIC and the REVS register. 

Under the PPSA a secu­ri­ty inter­est will not be enforce­able unless it attach­es to col­lat­er­al. Attach­ment is sim­i­lar to the con­cept of the cre­ation of legal­ly bind­ing rela­tions. A secu­ri­ty inter­est attach­es to col­lat­er­al when the grantor gives val­ue for the secu­ri­ty inter­est or car­ries out an act by which the secu­ri­ty inter­est arises. 

The PPSA will also cre­ate the con­cept of per­fec­tion. Per­fec­tion is a form of pro­tec­tion for a secured par­ty that is stronger than the mere attach­ment of its secu­ri­ty inter­est. In order for a secu­ri­ty inter­est to be per­fect­ed it must have attached, be enforce­able against third par­ties and either be reg­is­tered on the PPS Reg­is­ter or the col­lat­er­al must be in the pos­ses­sion or con­trol of the secured par­ty. The per­fec­tion of a secu­ri­ty inter­est will affect the pri­or­i­ty it has rel­a­tive to oth­er secu­ri­ty inter­ests in the col­lat­er­al, and its sta­tus in the event of the insol­ven­cy or bank­rupt­cy of the grantor. 

Tran­si­tion to PPSA

As part of the tran­si­tion­al arrange­ments, all cur­rent secu­ri­ty inter­ests on rel­e­vant reg­is­ters of secu­ri­ty inter­ests will be migrat­ed to the PPS Reg­is­ter when it becomes active. A tran­si­tion­al secu­ri­ty inter­est (one which is in force at the time of tran­si­tion to the new régime) will be deemed to attach to the col­lat­er­al imme­di­ate­ly before the PPS Reg­is­ter becomes active. This ensures that any exist­ing secu­ri­ty inter­ests will not be affect­ed and will retain their pri­or­i­ty. There will be a tran­si­tion­al peri­od of 24 months dur­ing which hold­ers of secu­ri­ty inter­ests will be able to per­fect their secu­ri­ty under the PPSA. 

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