Personal Property Security - A New Paradigm
Are you prepared?
Banks and other financial institutions have been working feverishly to put systems in place to deal with the new Commonwealth Personal Property Securities Act 2009 (PPSA). Many businesses however appear to be putting off dealing with the paradigm shift that will occur - in October this year - when the legislation comes into force.
Businesses should not underestimate the impact that the new legislation will have. It will affect almost all personal property - basically anything other than land.
It applies not only to those businesses leasing goods or supplying goods on credit and wanting to retain title until paid but also parties entering into joint ventures, alliances and other collaborative arrangements where personal property may be installed or provided.
Did you know that:
the reforms amend or repeal more than 70 pieces of State and Federal legislation
retention of title is treated as a 'security interest' for the purpose of the legislation and needs to be registered by a critical point in time
other ownership interests - e.g ownership of leased assets - are also deemed to be 'security interests' and can be lost if appropriate steps are not taken under PPSA
lessors, owners and suppliers are not fully protected during the two year transitional 'grace period' and urgent action will be required to ensure protection
in two benchmark New Zealand decisions following the introduction of an equivalent PPSA regime, owners lost a $2million stallion because they did not understand the regime and another rental company lost ownership of its stock of portable offices
if you are acquiring goods you can require your suppliers not to register retention of title and other security interests.
Many established principles of legal title are turned on their head under the PPSA legislation.
HireCo hires out mobile cranes to large building projects. HireCo puts a crane on DeveloperCo's land. HireCo doesn't bother to register this arrangement on the new register of personal property securities.
Outcome A: After a year DeveloperCo appoints a voluntary administrator. The crane now belongs to DeveloperCo - not HireCo.
Outcome B: DeveloperCo sells the crane (wrongfully) to Bloggs. The crane will belong to Bloggs.
The commencement date for the PPSA legislation has been pushed back from May 2011 to October 2011 to allow business additional time to prepare. With a little over seven months remaining you should be taking steps now to:
understand the impact of the legislation on your business;
where necessary, revising your standard contracts or terms and conditions of sale.
PPSA Project Team Support
Bartier Perry is offering the following services to assist you to come to grips with the PPSA regime in sufficient time to avoid loss of valuable assets. To register your interest in any of the following services speak to your Bartier Perry lawyer.
Free Introductory PPSA Seminar
We will be holding a series of free client seminars on specific aspects of the PPSA regime as it relates to:
sellers and distributors
IT and IP industry
mergers and acquisitions
Places are limited. Contact Bartier Perry for more information.
Group or Private Briefings
Our PPSA service team will come to you to conduct a private 2 hour briefing with your executive team. The briefing will cover the key concepts introduced by the PPSA legislation and home in on the critical issues for your Industry. You will walk away with business specific, practical strategies for dealing with the new legislation. The cost for a private briefing is $1,650 (GST inclusive) which includes a preliminary discussion to obtain more detail about your business.
Alternatively, you can join a Group Briefing Session at our offices at a cost $500 per person.
We also provide a tailored compliance service to assist you to become PPSA ready. After scoping a work plan in consultation with you we'll deliver;
a tailored written advice to you on the operation of the PPSA legislation;
an in-house training presentation to your management team on the operation of the PPSA legislation;
a review and amendment of the terms and conditions and credit arrangements under which you conduct business with your customers (and this review can also take account of changes in the Trade Practices Regime which have also come into force in Australia); and
a review of your existing contracts - to identify contracts that need to be refreshed or registered so that you comply with the PPSA legislation.
The cost for this will be a negotiated fixed fee based on time and resources to be deployed.