personal properties securities legislation

1 December 2009

On 26 November 2009 the Federal Government passed the Personal Property Securities Bill 2009 and the Personal Property Securities (Consequential Amendments) Bill 2009 (PPS Bills) creating a single legal framework for lending using personal property as security. The PPS Bills are expected to commence in May 2011.

The Government intends the PPS reforms to play an important part in increasing the availability of credit to more businesses, while ensuring that consumers will have greater certainty in acquiring unencumbered goods.

The reforms rely on a constitutional referral of power from the states. To date, New South Wales, Queensland, Victoria and South Australia have passed referral legislation. The other states are expected to refer powers in the near future.

What is personal property?

Personal property is everything except land, fixtures, and water rights. It includes all types of goods, for example, cars, ships, planes, mining equipment, farm machinery, as well as shares, units, contractual rights and intellectual property, including trademarks and designs.

History

The PPS Bills have been the subject of three inquiries by the Senate Legal and Constitutional Affairs Legislation Committee. The report into the Personal Property Securities (Consequential Amendments) Bill 2009 (Consequential Bill) released in November 2009 made a number of recommendations including that the government:

continue to complete the majority of personal property securities reform;
maintain discussions on the outstanding issues, and
undertake further legislative action as required.

The Consequential Bill

The Consequential Bill functioned to:

allow for consequential amendments to Commonwealth fisheries legislation, intellectual property legislation and maritime legislation;
make important drafting changes to the Personal Property Securities Act 2009, and
make consequential changes to other Commonwealth legislation, for example, the Bankruptcy Act 1966.

The passing of the PPS Bills provides some certainty and allows business to prepare for the implementation of the PPS Act but further legislative changes in the form of the PPS Regulations which are expected in the first quarter of 2010 and consequential amendments to the Corporations Act 2001 as well as possible future amendments to the PPS Act are to be expected.

Recommended actions

The new legislation brings many changes to existing commercial law and has far-reaching implications for security interests and other financing and commercial transactions.

It is important that business and financiers move quickly to deal with new regime so that they can protect their interests. Suggested actions include:

review and revise personal property security documents as required to ensure that they are PPS Act compliant;
review procedures and identify all interests required to be registered on, and procedural changes required to effect registration on, the PPS register; and
monitor further legislative changes.

For further information, please contact:

Ralph Mann | Partner
Mullins Lawyers
t +61 7 3224 0260
f +61 7 3224 0333
rmann@mullinslaw.com.au