In brief: Personal property security reform in Papua New Guinea is one step closer to becoming law following the government's release of draft regulations for public comment. Partner Karla Fraser (view CV) and Senior Associate Sarah Kuman report.
ISSUE OF DRAFT REGULATIONS
On 1 June 2015, the PNG Treasury Department issued draft Personal Property Security Regulations (the Regulations) for public comment. Among other things, the draft Regulations:
- provide that the Registrar of Companies (the Registrar) will be responsible for administration of the Personal Property Security Act (the PPSA) and Regulations;
- set out fees for registration of security interests on and from commencement of operation of the PPSA;
- provide that no registration fees will be charged for the filing of notices in relation to transitional interests during the 180-day transition period following commencement of the PPSA;
- provide for the creation of user accounts; and
- provide that the Registrar will be responsible for the issue of applicable forms, which indicates that paper filings will still be possible, as well as online filings.
The PNG Treasury Department has invited submissions on the draft Regulations by Friday, 26 June 2015.
Our latest update from the PNG Treasury Department, which is overseeing the implementation phase of the PPSA, is that implementation will occur towards the end of 2015.
The PPSA was passed into law on 9 December 2011 and, initially, there were plans for the Act to commence after an implementation phase of six to nine months, which included procurement and establishment of a personal property security register (the PPSR), preparation of the Regulations and a public information process. However, due to various delays with the procurement and establishment of the PPSR, all other stages of the implementation phase have also been delayed.
Following issue of the draft Regulations, it is expected that the public information process will commence in the next few months.
The PPSA will dramatically reform the law in PNG relating to security over almost all property, except land and interests in mining and oil and gas tenements.
When the PPSA commences operation, parties will have six months to register existing security interests, or risk losing priority. Security interests arising on and from the date of commencement of operation of the PPSA should be registered immediately, to best protect the priority position in relation to that interest.
Companies with operations in Australia will be aware that this six-month period is significantly shorter than the equivalent period for the transition under Australia's PPSA law, which had a two-year transition period for registration of existing interests. The PNG Government does not propose to provide for any 'migration' or 'transfer' of security interests already registered on existing registers under existing laws, such as registered company charges or bills or sale.
We will provide further updates when we have more information on the likely commencement date.
As commencement of operation of the PPSA edges closer, it is important that businesses have scoped their potential exposure to the PPSA, and have policies and processes in place to start registering interests on the PPSR on and from the date of commencement. If you would like to discuss the new law or its impact on your business or operations, please contact one of the people below.