1. Personal Property Securities Act 2008 Background &Key Concepts
Kingston CEO Roundtable
Presenter: Tony Burke

2. Introduction New Personal Property Securities Act 2008 (Cth)
Started January 2012
Affects most businesses
It is important
It is a game changer!
PPSA Briefing

3. Real Property Freehold Leasehold Mortgage interest
Buildings and fixtures attached to land
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4. Personal Property
Not land, buildings or fixtures which form part of land
Motor vehicles Contract rights
Plant and equipment - Art
Machinery and crops Livestock
Intellectual Property - Inventory
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5. Security interest – old law
Mortgage over motor vehicle
Charge over company property
Retention of title clause
Financing leases
Goods on consignment
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6. Problems with old system
Ad hoc patchwork of legislation and registers
70 separate Acts of Parliament
25 separate government departments
3 Ministerial Councils
Law going back to England in the 1800s
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7. Problems with old system - Continued
Incomplete coverage
Overlapping legislation
Movement of property and security providers across jurisdictions
Focus on form rather than substance
Expensive and bureaucratic
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8. Economic Benefits of Change
Simple to create and register a security interest
Low cost
Clarity of security interests
Low cost of enforcement
Effective tool for lenders
National consistency
Reduced cost of borrowing (between 3% and 4%)
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9. PPS Act – Key Attributes
A single, national, electronic register of “Security Interests” in
personal property
Rule based system to determine priorities
Run by ITSA
Referral of State and Territory powers to Commonwealth
Government
PPSA Briefing

10. Collateral – Exclusions
A lien arising by operation of law (mainly relevant for lawyers)
State based “statutory rights” such as taxi licences, gambling
licences, racing licences, fishing licences and some mining and
expiration licences
Water rights
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11. Collateral Personal property with a security interest attached to it
Not consumer property
Distinction between inventory and non-inventory goods
Special rules for some property described by serial number
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12. Property to be described by serial number
Motor vehicles
Watercraft
Aircraft
Intellectual Property Rights such as registered designs, patents,
plant breeder rights, trademarks
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13. Established by Agreement; or Established by application of PPS Act
Security Interest
Established by Agreement; or
Established by application of PPS Act
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14. Agreements leading to security interests
A charge
A chattel mortgage
A conditional sale agreement
A hire-purchase agreement
A consignment of goods
A lease of goods
Names are not important! Substance matters.
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15. Deemed security interest
Commercial consignment of goods
A PPS lease
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16. PPS Lease Covers leases and bailments
Must be for more than 1 year (including options)
For “serial numbered goods” need only be 90 days lease or
bailment
Leases and bailments for an indefinite term
Lessor or Bailor must be engaged in the business or regularly
leasing or bailing goods
Bailee must provide value. Free loan of goods not caught
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17. Secured Party and Grantor
Consistent terminology to simplify arrangements
For every “security interest” there will be a “grantor” and also a
“secured party”
Sometimes obvious, sometimes not
Possession of goods more likely to indicate grantor, regardless of
what document says
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18. Attachment and Perfection
Attachment first step. Perfection the second step.
Security interest attaches to goods when the grantor acquires
rights in collateral
To achieve perfection, agreement in writing and registration of a
financing statement on the PPS register
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19. Financing Statement Summary statement lodged with the PPS register
Source document not required
Must contain information about parties, the type and class of
collateral
May require serial number
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20. Priority Rules
A perfected security interest has priority over an unperfected
security interest
Priority between perfected security interests is determined by the
order of perfection
Priority between unperfected security interests is determined by
the order of attachment
A perfected Purchase Money Security Interest or PMSI has
priority over perfected security interests
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21. Purchase Money Security Interest
Creates a category of “super priority”
For the protection of suppliers who finance the acquisition of
specific assets
Designed to protect goods being caught by general charging clauses
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22. Proceeds and Accessions
No registration then goods at risk
Tracing rights available to registered security interest holders
Helpful for suppliers of certain products – e.g. concrete or raw
materials
- Accession or attachment rights – e.g. Motor in a truck
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23. Taking property free of security interest
Generally an issue when the holder of goods becomes insolvent
Still protection for bona fide purchaser at arm’s length, but only in
relation to unperfected interests in property
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24. Personal Property Security Register
Single, national online register
Replaces existing State and Territory Registers
Migration of existing registers to new PPS Register
Problems in data transition
Search by name, ABN and ACN
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25. Things to do Review standard documents
Review Shareholders’ Agreements or Division 7A Loan Agreements
Check exposure under guarantees
Double check bank and loan documents from now on
When purchasing goods or a business check the security register
Check your own business on the register
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26. Resources
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27. Disclaimer
This presentation is intended to provide only a summary of the provisions of the PPS Act. The Act and associated legislative enactments provide for a complex new regime. Accordingly, this presentation should not be relied upon as a substitute for professional advice as the circumstances of each reader will vary and the implications of the PPS Act likewise.
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28. Presenter – Tony Burke Accredited Business Law Specialist
Principal of Burke & Associates Lawyers Pty Ltd
Inaugural Chair of the SME Business Law Committee of the Law Council of Australia
former President of the Law Institute of Victoria
former Director of the Law Council of Australia
member of the Australian Institute of Company Directors
- Member of Kingston CEO Roundtable
PPSA Briefing