PPSA - Personal Property Securities Register What solicitors should know about it? TITLE IS NO LONGER KING! • Revolution: the new Personal Property Securities Register • Personal Property Securities Register: tips for using the new register • Specific compliance issues of interest for SMEs

1. THE PPS REGISTER
What solicitors should know about it?
www.sklawyers.com.au
Ben Sewell
Principal of Sewell & Kettle Lawyers

2. THE PPS REGISTER
What solicitors should know about it?
www.sklawyers.com.au
TITLE IS NO LONGER KING!
• Revolution: the new Personal Property Securities Register
• Personal Property Securities Register: tips for using the
new register
• Specific compliance issues of interest for SMEs

3. THE PPS REGISTER
What solicitors should know about it?
www.sklawyers.com.au
Why is the PPSR a revolutionary change?
• Security interest is a practical definition linking concepts of
securitisation
• Title is no longer king: Priorities mainly determined by
registration
• PMSI to protect the interests of SMEs in insolvency
scenarios
• Public register will change business processes- false wealth
risk minimisation

4. THE PPS REGISTER
What solicitors should know about it?
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Take-away policy
•Take away at least three ideas from seminar but use
information quickly
•If the idea is for a client- email your client or referrer within 24
hours (SME’s crave information)

5. THE PPS REGISTER
What solicitors should know about it?
www.sklawyers.com.au
Summary of the new Personal Property Securities Act (PPSA)
The PPSA governs the
1. Validity;
2. Enforceability; and
3. Priority
of security interests in personal property generally

6. THE PPS REGISTER
What solicitors should know about it?
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New terminology
• Personal Property Securities Act 2009 (Cth) (PPSA)- the new law
• Personal Property Securities Register (PPSR)- the new register
• Personal Property- property but not land or section 8 exclusions
• Security Interest- in substance test
• Grantor- person who grants the security
• Secured Party- a party who holds a security interest in collateral
• Collateral- personal property to which security interest is attached
• Attachment & Perfection
• Purchase Money Security Interest (PMSI)
• General Security Agreement (replacing the fixed and floating
charge)

7. THE PPS REGISTER
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New test for registrable security interest
“In substance” security interest?
A Canadian case developed the following principles:
1. SI is consensual/contractual
2. SI secured payment or performance of obligation
3. SI relates to personal property
4. SI bestows some form of proprietary right

8. THE PPS REGISTER
What solicitors should know about it?
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Genesis: securitisation of personal property
• 1862 Holroyd v Marshall- mortgage over existing and future
machinery
• 1888 Tailby v Official Receiver- mortgage over book debts
(circulating assets in ordinary course of business)
• 1898 Bills of Sale legislation (NSW)
• 1920s USA Hire-Purchase Agreements to help growth of
automobile industry
• 1976 Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd-
retention of title in conditional sale agreements

9. THE PPS REGISTER
What solicitors should know about it?
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Focus on Small-to-Medium Enterprises (SMEs): Contract
updates
• Your clients may need to be organised and register
(business process and documentation update)
• Basic requirement is a security agreement that adequately
identifies collateral
• Retention of title – few aware of registration requirements for
ROT claims
• Debt collection: Personal guarantees may be secured
against director’s personal property

10. THE PPS REGISTER
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Focus on Small-to-Medium Enterprises (SMEs): Financing
• Financing of SMEs formerly by way of fixed and floating
charge
• Charge is a Security Interest under the PPSA
• General Security Agreement is the new financing instrument
for banks
• Also a charge over specific assets (specific security
agreement)
• Banks are likely to require SMEs to execute further
documents in short term

11. THE PPS REGISTER
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Focus on Small-to-Medium Enterprises (SMEs): New due
diligence issues
• Financiers are taking an interest in searches and registering
PMSIs over inventory
• Sale of business changes- PMSIs will need to be examined
by purchaser’s solicitor
• Suppliers may use PPSR searches to evaluate asset
position and debt level of a customer with other suppliers

12. THE PPS REGISTER
What solicitors should know about it?
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PPSR: New central register
• Vast array of registers built up over time that are replaced by the
PPSR
• Property (collateral) to be registered divided between consumer
and commercial
• For some property you will need serial numbers to register interest
(e.g. motor vehicles and watercraft) if consumer property (overlay
with Consumer Credit Code)
• It’s cheap, $3.70 for a search and $7.40 for 7 year registration
• No restrictions on who can register SI so you can register on behalf
of your clients

13. THE PPS REGISTER
What solicitors should know about it?
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Go to: www.ppsr.gov.au
• Straightforward design of website
• Casual user (credit card) or 30 day account
• Same portal for both searches and registration
• Your clients will make their own registrations online
• ITSA call centre for assistance available

14. THE PPS REGISTER
What solicitors should know about it?
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PPSR: Registration process
• Secured party lodges a financing statement (online by
secured party or upload through agent)
• Data entered and Registrar returns a verification statement
• In addition to verification statement a token is sent to
secured party
• Secured Party Group- for groups of related users to make
registration easier

15. THE PPS REGISTER
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What information can you search on the “noticeboard”?
• Details of grantor and secured party
• Serial number (i.e. VIN of motor vehicle)
• Collateral class and description (may be just “inventory”)
• Term of security
• But no copy of contract or details of net indebtedness

16. THE PPS REGISTER
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PPSR: What is the scope for searching?
• No wildcard search- precise spelling and reference details
required
• Search by grantor, serial number, unique financing
statement reference, point-in-time (through ITSA call centre)
• Person must have authorised purpose for search if the
search related to an individual grantor

17. THE PPS REGISTER
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Specific interest area: Fixtures
• Fixture excluded by section 8
• Fixtures is not defined in the PPSA
• May be an opportunity for strategic registrations if it fall
outside legal category of fixture- title is no longer king

18. THE PPS REGISTER
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Specific interest area: Retention of Title
• Registration required in insolvency scenario
• Ideal security is a PMSI as it give a “super-priority”
• Most SMEs are not aware that registration is required

19. THE PPS REGISTER
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Specific interest area: PMSI
• Super-priority - ahead of other secured creditors (i.e. bank)
• Extends to book debts and proceeds arising out of sale of
collateral
• Defeated by control (trump)
• Don’t tick the PMSI box (if you have a mere SI) or you lose
your security

20. THE PPS REGISTER
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Specific interest area: Obtaining information about other
security interests
• An “interested person” may request information from a
secured party
• Information: Copy of security agreement and details of the
debt
• This obligation can be waived by confidentiality agreement
(i.e. term) between grantor and secured party

21. THE PPS REGISTER
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Specific interest area: Transitional interests
• Transitional Interest: A security interest created before 30
January 2012 or out of an agreement dating to before 30
January 2012
• Generally, transitional interests will be taken to be perfected
for a period of 24 Months from 30 January 2012 (temporary
perfection)
• Current: Complete compliance with PPSR to avoid any
doubt in insolvency scenarios rather than rely on transitional
interests

22. THE PPS REGISTER
What solicitors should know about it?
www.sklawyers.com.au
Questions?
Ben Sewell contact details:
Phone: 02 8251 0075
Email: bsewell@sklawyers.com.au
Skype: sklawyers