The Personal Property Securities Act 2009 (Cth) will now apply from a date to be set in October 2011. At its recent meeting the Council of Australian Governments agreed to defer the registration commencement time from the original target of May this year.
A recent decision at COAG now means that the Personal Property Securities Act 2009 (Cth) (PPSA) and the new PPS Register will ‘go live’ from October 2011. Consequential amendments to Commonwealth, State and Territory legislation will also apply from October 2011.
The final set of amendments to the PPSA and other Commonwealth legislation have now been introduced into parliament in the form of the Personal Property Securities (Corporations and Other Amendments) Bill 2011 (Amending Bill). The Amending Bill amends both the PPSA and the Corporations Act 2001 (Cth) and addresses some of the concerns which have been raised by stakeholders in relation to these reforms.
The key points in the Amending Bill include:
- The definition of ‘security interest’ in section 12 of the PPSA will refer to “an interest in personal property” rather than “an interest in relation to personal property”. This should provide greater certainty around the meaning of this key concept and is consistent with the drafting approach in the comparable New Zealand and Canadian legislation.
- A security interest in an ADI account can only be perfected by control when the secured party is the ADI. However, other secured parties can ‘control’ an ADI account for the purposes of Part 9.5 of the PPSA which is relevant to whether a secured party has a ‘circulating security interest’ under the Corporations Act. An ADI with a perfected security interest in an ADI account with that ADI will have priority over any other perfected security interest in that ADI account unless this position is varied by a priority agreement.
- The extinguishment rule in section 44 of the PPSA for serial numbered property will not apply during the 24 month transition period to migrated security interests in motor vehicles and certain watercraft. Similarly, the extinguishment rule in section 52 of the PPSA will not apply to transitional security interests that receive temporary perfection for the 24 month transition period.
- Subject to contracting out when permitted, when the grantor of a security interest is a company, the enforcement provisions in chapter 4 of the PPSA will apply to controllers who are not receivers or receivers and managers.
- A new priority rule for continuously perfected transitional security interests over other security interests perfected by control.
- If a grantor grants a security interest by a transfer of an account or chattel paper, the account or chattel paper is not a ‘circulating asset’ for the purposes of Part 9.5 of the PPSA. This means transferred accounts cannot be ‘circulating security interests’ under the Corporations Act. The Bill does not distinguish between legal and equitable transfers.
- The right of a secured party to appoint or veto the appointment of an administrator under an transitional security interest will not be affected.
- The liability of receivers and the ability of administrators to avoid liability for transactions entered into by the company before their appointment will not change.