All businesses or individuals that hold, license or own "security interests" – such as a charge, mortgage, or retention of title – over personal property – such as equipment, cars, software or debts – must know the impact of the new Personal Property Securities Act 2009 (PPSA). From 30 January 2012, the Personal Property Securities Register operates as the central reference point for registration of security interests over personal property. Businesses and individuals need to be up to speed on this to ensure protection of their security interests.
The Act defines a security interest broadly as:
- an interest in personal property
- that secures a payment or the performance of an obligation.
Personal property is all property, other than land and some specified statutory licences – it includes retention of title clauses, intellectual property rights and equipment leases.
Two year transition period until 30 January 2014
Under the PPSA, any security interests over personal property must be registered on the new Personal Property Security Register to ensure protection in the event of insolvency. This includes any interests which predate its existence.
Whilst the scheme provides a grace period of two years in which pre-existing security interests will continue to be protected, even where not registered, this protection will lapse after the transition period expires on 30 January 2014. On that date, any unregistered security interests will no longer be effective if the company holding the assets becomes insolvent.
Suppliers however cannot can sit on their hands during the transition period, because the two year transition period does not apply to new sales or transactions made after 30 January 2012 when the scheme started. All new sales, leases, consignments and new business contracts will have to comply with the PPSA if owners and holders of security interests want to be protected if their customer becomes insolvent.
For further information please see:
Other important changes – Transition, ROTs and IP Licence
Registration Procedures under the Personal Property Securities Register (PPS Register)
Retention of Title Clauses (ROT clauses) and PPS Register