The Personal Property Securities Act (PPSA)
is expected to come into force on 11 May 2011. In anticipation, the government
has advised ‘an early bird and worm’ strategy - the sooner businesses start restructuring
and reorganizing, the easier it will be on commencement of the legislation in
2011.
Who
will the PPSA impact?
Businesses and professional advisors such as
financers and insurers, suppliers, manufacturers and lessors as well as
insolvency practitioners will need to ensure they become PPSA compliant.
Key changes
- Stakeholders
will be served by one national Act.
- This
uniformity will be supported by a national online register of securities.
-
Securities
such as company charges and chattel mortgages will be registered in the new PPS
register, no longer with ASIC.
-
Conditional
sale agreements, retention of title provisions, certain leases, interests in
motor vehicles and boats will also be registerable interests in the PPS
register.
-
On
the other hand, some Registers will be discontinued and land and statutory
licenses will not fall under the new register.
How should businesses respond?
Businesses
should firstly become proactive, right away. Complacency should be fought even
if May 2011 seems far away. The PPSA will demand significant transformation to
the daily running of businesses. This time should be used to fully prepare for
these changes, educate staff and customers and get ready to do business,
differently.
In summary:
- Learn
how your business can become PPSA compliant.
- Understand
the impact the new regime will have on your business dealings whether you are a
financial institution or a manufacturer.
-
A
comprehensive review of business security registers falling under the PPSA will
be needed.
-
Work
closely with professional advisors in restructuring business documentation,
operating models and trading terms.
- Familiarize
yourself with the consequences for failure to comply. This becomes particularly
important if the security provider becomes insolvent where an unperfected
security is involved.
-
Manufacturers will no longer remain owner of goods
but become holders of security interests instead.