New rules

Retention of title arrangements

The new rules that are most likely to affect small and medium enterprises (SMEs) are those relating to retention of title business practices.

Under PPS reform, businesses can no longer rely solely on retaining title to their goods to reclaim them if they supply to customers who become insolvent or bankrupt – they need to register on the PPS Register.

Under the Personal Property Securities Act 2009 (Cth), the supplier can register their interest on the PPS Register in order to protect that interest, and their right to repossess the goods, if the customer failed to pay.

For continuous supply of goods situations, the supplier needs only to register once for each customer – not for every supply.

Lessors

Under PPS reform, lessors can no longer rely only on ownership to ensure they can reclaim their goods if the lessee becomes insolvent or bankrupt – they need to register on the PPS Register.

Banking and finance

Banks and finance companies may chose to review the adequacy of standard charge and mortgage documents to see if they can be simplified. As with all business sectors, they should also ensure they have the correct information about the grantor to make an effective registration.

Many banks and finance companies have taken advantage of the special business‑to‑government (B2G) channel to ensure that multiple transactions can be processed efficiently. If you would like more information about B2G, please contact us.

Australian Securities Exchange (ASX) top 200 companies

From now on, company charges will be registered on the PPS Register and not the ASIC Register of Company Charges. All existing charges registered prior to October 2011 have been migrated automatically.

Motor vehicle industry

The commencement of PPS reform has a significant impact on the motor vehicle industry, because transactions for securities interests in this industry are predicted initially to be the majority of registrations on the new national PPS Register.

The application of the PPS Act to retention of title arrangements in the spare parts sector and to vehicle leases represents a significant change for the industry. Each state and territory register of encumbered vehicles/ vehicles securities register have been replaced by the PPS Register. All registrations made prior to October 2011 have been migrated to the PPS Register automatically.