Transitional provisions 

The transitional provisions in the Personal Property Securities Act 2009 (Cth) Chapter 9,PPSR Act are designed to facilitate a seamless changeover from the current law to the PPS Act and explain how this change will affect security interests.

When the PPS Act will apply to transactions

A key concept established in the transitional provisions is the ' registration commencement time Section 306(2), PPS Act ' (RCT). The RCT will be determined by the Attorney-General in accordance with Council of Australian Government timeframes. The Personal Property Securities Register (PPS Register) will become active after the RCT. It will only be possible to make an application for registration of a security interest on the PPS Register after the RCT.

The PPS Act will apply to security interests that are created, or 'attach', after the RCT as well as 'transitional security interests' (TSI). A TSI is a security interest that existed at the RCT.

An exception to this is the procedures and remedies for enforcing a security interest in Chapter 4 of the PPS Act which will only apply to security interests created under security agreements made after the RCT. A secured party enforcing a TSI will have to use procedures and remedies contained in the law under which the TSI was created.

Migration of security interests from pre-PPS registers

All current security interests on relevant Commonwealth, State and Territory registers of security interests will be migrated to the PPS Register. These include the ASIC Register of Company Charges as well as the State and Territory based motor vehicle securities, co-operative charges and bills of sale registers.

Data relating to current security interests will be 'migrated' or populated onto the PPS register in the calendar month Section 333, PPS Act prior to the RCT. The IT approach to migration will ensure that all registrations made on the current registers are migrated, even if they are made on the last day those registers accept new registrations.

The attachment rule

A TSI is deemed to have 'attached', as defined by the PPS Act, to the collateral immediately before Section 321, PPS Act the RCT. This ensures that a TSI created under non-PPS Act law complies with this requirement in the PPS Act.

The perfection rule and priorities

The key outcome of the transitional provisions of the Act is to ensure that the rights of a party to a security transaction under pre-PPS law are not adversely affected by the transition to the PPS Act. This is achieved through the 'perfection rule' and the effect it has upon TSIs and other security interests.

Under the perfection rule a TSI benefits from a period of 'temporary perfection' during which it is deemed to be 'perfected' from immediately before the RCT until the earliest of either:

1. perfection under the PPS Act, or, Section 322(2), PPS Act
2. the end of the 24 months after the RCT. Section 322(2), PPS Act

This effect of this temporary perfection period is to provide a safe harbour within which secured parties can adapt to the PPS Act and the operation of the PPS Register. The effect of 'bridging' the period of temporary perfection back to immediately before the RCT ensures that a TSI generally has priority over security interests created after the RCT in the same collateral. The temporary perfection period lapses after 24 months. If the secured party has not perfected under the PPS Act within this time period their TSI becomes unperfected and would be subordinate in priority to a security interest that was perfected.

The priority rules

There are a number of changes to  priority rules Section 320, PPS Act that apply during the 24 month temporary perfection period. The table below provides an explanation of these

These outcomes reflect the general priority rules of section 55 of the PPS Act. A priority dispute between TSIs would be determined by the pre-PPS Act law under which they were created. Section 323, PPS Act