Ontario’s most recent Open for Business Act, 2010 (referred to as a “good government bill”, formerly referred to as red tape reduction statutes) amends a number of statutes. The Bill had first reading on May 17 and second reading on June 3, and has been referred to a committee. The amendments reflect some of the Ontario Bar Association's recommended changes to the Ontario Personal Property Security Act (the "Ontario PPSA") and the re-instatement of a couple of items that were inadvertently repealed in 2007. These are:
- harmonizing Ontario with the other PPSA statutes in Canada to provide that the time to perfect a security interest as a PMSI for “equipment” collateral is extended from the present 10 days after the debtor or its agent obtains possession of the goods, to 15 days;
- amending section 56 of the Ontario PPSA to allow a debtor to demand that a secured party who has claimed more collateral in its registration than is covered by the security agreement, amend the registration to reduce the collateral to that covered by the security agreement, or, where the registration has not provided a description of the collateral in words limiting the collateral as claimed, then to amend to add a limiting word description;
- reinstating section 46 of the Ontario PPSA, retroactively to August 1, 2007, to provide that when a class of collateral is claimed in a registration, and words are inserted in the registration to describe the collateral, then the collateral is limited to what is described in words; and
- reinstating in the definition of “purchase-money security interest”, retroactively to January 2007, the exclusion from PMSI status for sale and leaseback, which exclusion was inadvertently dropped in the January 1, 2007 amendments to the Ontario PPSA made to implement the Ontario Securities Transfer Act.
It is a great relief that the right to rely on words of limitation in Ontario PPSA registrations is being returned to us, as we read through lengthy Ontario PPSA search results as part of business transactions and advise our clients when they require disclaimers of interest from prior registered secured creditors.