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.
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:
|security interest in a circulating asset
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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