The Personal Property Securities Act (2009) and the associated Personal Property Securities Register (PPSR) finally came into force on 30 January 2012.
It might refer to “personal property” but this legislation is absolutely about business assets. The PPSA replaces over 70 State and Commonwealth legislations in Australia that currently govern ownership of both tangible and intangible assets.
Examples of assets covered under the PPSA:
- Plant and Machinery
- Intellectual Property
Land and Buildings are explicitly excluded but you need to understand some of the small print about these exclusions.
Is Your Business Affected By The PPSA?
This legislation has massive implications for virtually ALL businesses. Yet it is estimated that some 80% of small and medium businesses are still unaware of the PPSA despite the fact that it received royal assent back in December 2009. In fact, it was originally supposed to have come into effect on 1 October 2011 but was delayed again due to technology hitches with the PPSR.
If your business:
- Sells goods on credit terms subject to retention of title
- Sells goods on consignment terms
- Leases or Hires Out property, plant and equipment
- Stores goods with other parties
- Grants licences to other parties to use products, trademarks or other intellectual property
- Provides any form of financing such as vendor financing
then your business is affected.
Why Is It Important To Be PPSA Compliant?
If you do not register your Security Interest in your goods or property on the PPSR in accordance with the PPSA, you could end up losing your rights over them, particularly if the other party in the transaction goes into receivership or liquidation.
Even at the best of times, you would ensure you always protect your interests in your property. In the current difficult economic climate with rising business bankruptcies, it is absolutely imperative that you take all necessary steps to protect your business assets.
Your business assets are security for loans provided by your financiers. They will they want to know that their security – being your assets – are protected.
Your financiers are likely to have already have been in touch with you to ensure that you are business processes are compliant with the PPSA. Failure to do so may constitute a breach of the covenants under your loan agreement(s).
Some Useful Resources
I am not a lawyer and the above is by no means a comprehensive coverage of the impact of the PPSA on your business. Here are some useful resources that I have come across:
- Lawyers Thynne & Macartney has a useful checklist on their website as well as various articles on the PPSA.
- Lawyers Cooper Grace Ward also has some useful articles that explain the PPSA and PPSR.
- Dun & Bradstreet (Australia) Pty Ltd also has useful information and provide services to help businesses plan and implement processes for PPSA and PPSR.
- I also posted a link to a recording of a presentation by Gadens Lawyers on the PPSA on my Facebook page on 30 January 2012. Check it out.
The important thing right now is to get advice – if you haven’t already done so – from your accountants, lawyers or business advisors.
Disclaimer: Nothing in the above constitutes legal advice. I have no affiliation with any of the above mentioned legal firms nor does any of the above constitute a recommendation of lawyers, advisors or other service providers. You need to obtain your own advice.