Security Register Transitional Period to Expire
9 December 2013
The transitional arrangements for the Personal Property Securities Register (PPSR) will expire at midnight on 31 January 2014.
While banks, financiers and commercial hire companies have sought professional advice in relation to the changes brought about by the PPSR, especially in relation to ‘perfecting’ their security interests over the supplies of personal property, it is believed the significance of the message may not have reached the wider business community, in particular small to medium enterprises (SMEs).
Essentially, business owners should be using the PPSR because it gives you the opportunity to achieve a higher level of security in the event of a customer’s insolvency.
Why is 31 January 2014 a key date?
The Personal Properties Securities Act 2009 (Cth) contains transitional provisions designed to assist with the changeover and provide protection for security interests that existed prior to the commencement of the PPSR on 30 January 2012.
To qualify for protection under the transitional provisions, the supply agreement had to exist prior to 30 January 2012. Should the supply agreement have existed prior to this date, the transitional provisions allow the supplier to register their interest on the PPSR in order to ‘perfect’ their security interest.
The protection afforded by these transitional provisions expires on 31 January 2014.
After this date, suppliers of personal property who have failed to register their security interest may lose their priority in the event of their customer’s insolvency. From 1 February 2014, security interests ‘perfected’ on the PPSR will take priority over all unregistered interests, including non-registered transitional security interests.
Examples of commercial arrangements that may be deemed transitional security interests and eligible for registration on the PPSR include:
- Leases/hiring agreements
- Retention of title supplies
- Commercial consignments.
For further information and to access a range of tailored fact sheets visit www. ppsr.gov.au or speak with your local Boyce Director.
Source: Institute of Chartered Accountants Australia www.charteredaccountants.com.au | Article last updated 25 November 2013