Personal Property Securities Act 2009

As a business owner it may be that you extend credit to your customers either with or without taking some kind of security such as a personal guarantee or by reserving ownership of goods through retention of title provisions in your terms of trade. In either case, and in many others, your credit management system will shortly need to receive your serious attention.

In May 2011, the Commonwealth Personal Property Securities Act 2009, will be introduced. It will be the most far reaching change in legislation to affect business since the introduction of the GST and will amend more than 70 State and Territorial acts which regulate rights in relation to personal property.

See Also: Personal Property Securities Act: 6 things you should know!

The PPS Act is designed to co-ordinate and streamline the competing claims to secured interests in personal property which are presently regulated by various State and Federal legislation. It does this by creating a central register of interests which will be called the Personal properties Securities Register (‘PPSR’). This Register will be a real-time online noticeboard which will allow anyone to search for security interests in personal property. It will be readily accessible online 24 hours a day, seven days a week.

The new legislation provides for the creation of a security interest (being an interest in relation to personal or business property other than land) by effecting a transaction which secures payment or an obligation by a security agreement.

How will it affect your business?

Like the GST, the PPS Act is likely to have an effect which goes far beyond what is currently contemplated even by the legislators. It is likely that terms of trade, applications for credit, personal guarantees, retention of title clauses, and most business transactions by which you obtain inventory from your suppliers and sell to your customers will give way to or be supplemented by security agreements which are set up to protect security interests. The benefits to business include that people who hold valid security interests will no longer be treated as unsecured creditors in the bankruptcy or liquidation of the grantor of the interest. The bottom line is that it will help you to get paid. The burdens include that an owner’s security interest under the legislation may lose priority to another security interest in certain circumstances.

People who hold perfected security interests under the PPS Act will be recognised as charge holders and will not be subject to unfair preference claims by liquidators under Section 588FA of the Corporations Act. So, when you are paid, you will not have to surrender your payment to the liquidator of an insolvent customer.

The introduction of the new legislation will bring with it a new culture, new attitudes and a new language to the law of personal property rights. From time to time we will be sending emails outlining details of the new regime and inviting you to attend a seminar or workshop here at Turnbull Hill Lawyers where we will assist you, our business clients, to become familiar with the new world of personal property rights and business transactions.

In the meantime, now is the time to review your terms of trade and credit management systems. For further information, please contact our Commercial Litigation Team.


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