New PPS amending bill
On the 12th of October, the Personal Property Securities Amendment (Registration Commencement) Bill 2011 was introduced into Australian Parliament. This Bill, if passed, will give flexibility to, if required, extend the date for the effective commencement of the PPSA. Under the legislation as it currently stands, the Attorney General may determine, the migration time and the registration commencement time but these must be no later than the legislated “deadlines”, 1 January 2012 (for the migration time) and 1 February 2012 (for the registration commencement time). The proposed Bill will amend the definition of migration time and registration commencement time under section 306 of the PPSA to effectively remove these deadlines. This will enable the Attorney General (as the relevant Minister under the PPSA) to determine that the migration time and registration commencement time be dates later than the automatic “deadline” times currently in force under the PPSA.
The Attorney General’s department maintains that, despite this proposed amendment, it is still working towards a registration commencement time of 30 January 2012. However, several stakeholders have made submissions to the Attorney General’s department to extend the commencement time beyond 1 February 2012. This amendment will allow flexibility for further extensions if the submissions are accepted or if the current user acceptance testing programs reveal any further problems.
The Personal Property Securities Amendment Regulations 2011, amending the Personal Property Securities Regulations 2010, were made on 29 September 2011. The salient amendments include:
- Providing that the PPSA does not apply to an interest in an authority, lease, licence or permit of any kind that is created under the Offshore Minerals Act 1994 or the Offshore Petroleum and Greenhouse Gas Storage Act 2006;
- Narrowing the definition of ‘motor vehicle’ to remove some uncertainties;
- Clarifying the meaning of ‘PPS lease’ to exclude from that concept a lease or bailment that is part of a certain pooling arrangement as prescribed in the Regulations (Pooling arrangements are broadly arrangements that are not used to pass title, but are lease/hire arrangements where fungible equipment is passed between users and eventually returned to the owner and where subsequent users of the equipment may not be party to the original lease/hire arrangements.);
- Clarifying the operation of the taking free rules where a transitional security interest in a motor vehicle was not registrable by serial number on the State or Territory register. In this situation a transitional security interest will not be affected by the taking free rule under subsection 45(1) during the 24-month period from the registration commencement time;
- Clarifying the operation of the PPSA in a compulsory acquisition of shares. Under existing law, a bidder who acquires shares in a target following a takeover bid or under a scheme is generally able to acquire those shares free of any security interests. However, under the Act there is uncertainty as to whether a person would ‘take free’ of an investment instrument or an intermediated security because the relevant provisions indicate that a consensual transaction is required. As a result, bidders who acquire shares following a compulsory acquisition may not be able to rely on the taking free rule in the Act. As a consequence, the default position in paragraph 32(1)(a) would apply and the bidder would take subject to any security interests in the acquired shares.
Clarifying certain provisions in relation to identification of parties:
- Part 1 of Schedule 1 of the regulations currently sets out identifiers to be used in identifying secured parties and grantors in a financing statement (as prescribed under section 153(1)). The amendments make it clear that Item 1 in each of the tables only refers to the initial registration made by the Registrar of migrated security interests in the PPS Register from the transitional register. Subsequent registration that amends the secured party or grantor details will need to consider the details provided in later items.
There have been amendments to other identifiers to make it clear that:
- clause 1.3 (of Schedule 1 of the PPS Regs) does not apply to a body corporate where a body corporate is a trustee of a trust that has an ABN (this is dealt with under clause 1.5);
- where an individual partner grants an interest over their interest in the partnership, the source of the details is to be found in clause 1.2 (individual identifiers); and
- where a body corporate is a partner of a partnership that does not have an ABN, the source of the details is to be found in clause 1.3 (body corporate identifiers).