The Personal Property Securities (Corporations and Other Amendments) Bill 2010 (CA Amendment Bill) was introduced into Parliament on 10 March 2010.
The Personal Property Securities (PPS) Act received Royal Assent on 14 December 2009, and the CA Amendment Bill is the second suite of consequential amendments to Commonwealth legislation brought about by the passage of the PPS Act.
While the main purpose of the CA Amendment Bill is to amend the Corporations Act 2001 (Corporations Act), it also amends the PPS Act and other Commonwealth legislation, including legislation relating to intellectual property and fisheries management. The structure of the CA Amendment Bill is as follows:
Schedule 1: Corporations Act - this schedule makes changes to the Corporations Act to align it with the PPS Act and close the Register of Company Charges; Schedule 2: PPS Act - this schedule amends the PPS Act to, among other things, simplify the transitional provisions; and Schedule 3: amendment of other Commonwealth Acts - this schedule makes consequential amendments to other Commonwealth legislation.
Amendments to the Corporations Act
It is necessary to amend the Corporations Act establish a clear and consistent single national legal regime for security interests in personal property. Schedule 1 of the CA Amendment Bill has a number of objectives, including:
- to close the Register of Company Charges (ASIC Register) under Chapter 2K of the Corporations Act;
- to amend the terminology of the Corporations Act so that it is in line with the PPS Act's broader functional approach to defining security interest (for example, where appropriate, to include "PPSA retention of title property" within the definition of property in the Corporations Act) and to include PPS Act security interests within the category of security interests in the Corporations Act;
- to maintain existing rights so that the amendments do not interfere with those rights; and
- to provide appropriate transitional provisions and application arrangements.
Further comments on the repeal of Chapter 2K and PPSA retention of title property are provided below.
Chapter 2K repealed
Chapter 2K of the Corporations Act which established the ASIC Register will be repealed. Under the new PPS regime, charges currently registered on the ASIC Register will be migrated to the PPS Register, and registrable company charges will be registered on the PPS Register from the PPS registration commencement time. The CA Amendment Bill provides that the PPS Act starts to apply at the registration commencement time, which is 1 February 2012 (being the first day of the month that is 26 months after this Act received Royal Assent) or an earlier time as determined by the Minister. In our recent conversations with the Attorney-General's Department, we were informed that the anticipated registration commencement time of May 2011 remains.
The ASIC Register will continue to be available as a record of existing charges for 7 years. The Insolvency and Trustee Service Australia (ITSA) will assume responsibility for the PPS Register when the Register commences operation in 2011. During the course of 2010, ITSA will work with the Attorney-General’s Department to implement the PPS regime, set up the PPS Register and establish a PPS Customer Contact Centre.
PPSA retention of title property
Currently under the Corporations Act, only transactions which create charges are security agreements. Under the PPS regime, a functional approach will be taken which means that the category of security interests will be expanded to include interests arising from certain transactions where the secured party retains title to the collateral. These include conditional sale agreements, Romalpa clause agreements, hire-purchase agreements, leases and consignments that secure the payment or performance of an obligation, commercial consignments and PPS leases as define by the PPS Act.
The CA Amendment Bill will define property that is the subject of this kind of security interest where title is not held by the grantor as "PPSA retention of title property". This will enable the Corporations Act to treat property over which a secured party retains title as secured property. For example, currently under the Corporations Act, if a company has become insolvent, the secured party who holds a security interest over the whole or substantially the whole of the company's property can appoint an administrator. Under the PPS regime, a holder of PPSA retention of title property would have the power to appoint an administrator to the company if the PPSA retention of title property constitutes the whole or substantially the whole of the company's property.