PPSR for Australia
Do you do business in Australia? This is probably something you should know.
Australia will soon be introducing their version of the Personal Property Securities Act, which has been around in New Zealand for a while.
The Act in both countries was put in place to simplify the process of registering and searching securities. The electronic register replaces, among others, chattels securities at the High Court, the Motor Vehicle Securities Register and registration of floating charges at the Companies Office.
Simply put, the register makes it easier for creditors to keep tabs on the things that are offered as security, allowing them to loan more easily, recover their money and to make safer lending decisions. As in New Zealand, the Australian register will be populated with data from the other registries automatically.
The new Australian law will affect New Zealand suppliers to Australian businesses who retain title pending, or take any other form of security over non-land assets. Just as in New Zealand, the Australian Act will cover all transactions that have the economic effect of creating security, as well as certain “deemed” security interests, including many leases.
The Australian version of the law is, in broad terms, very similar to ours. There are however, some vagaries that make the Australian law a bit more complex – it requires written consent from the debtor to register a financing statement for it to be enforceable against third parties, for example.
Another important difference is to the super priority of PMSI’s (Purchase Money Security Interests), which could also seriously affect anyone selling goods into Australia. When registering, a secured party has to nominate whether the security interest constitutes a PMSI and if they get it wrong, they remain unsecured.
With the law coming into practice in October, 2011, it is important that your clients and partners doing business in Australia be made aware of it as soon as possible.
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