Registrar's Practice Statement No 4

1. Amendment Demand Process

Version 2.1


Release Date: 21 May 2012
Updated: 22 August 2013


2. Background and Purpose

Part 5.6 of the Personal Property Securities Act 2009 (Cth) (PPS Act) provides for a resolution process for disputes regarding registrations where one party considers that:

  1. no collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party; or
  2. the registration describes particular collateral in which the person has an interest, which does not secure any obligation (including a payment) owed by a debtor to the secured party.

Part 5.6 of the PPS Act provides three avenues to pursue a resolution to such a dispute:

  1. the parties reach a resolution reached between themselves through the exchange of an amendment demand;
  2. the administrative process for an amendment demand; and
  3. the judicial process for an amendment demand.

This practice statement outlines the background to the amendment demand process and the approach of the Registrar of Personal Property Securities (the Registrar) to the administrative process for an amendment demand.

Key terms

Amendment Demand

An amendment demand is a written demand to a secured party that is made by a person with an interest in the subject collateral, relates to a registration which is in respect of a security interest in the subject collateral; and requires the secured party to amend a registration to end the effective registration; or omit particular collateral from the description.

The amendment demanded must be an "authorised amendment". Pursuant to section 178 of the PPS Act, an authorised amendment is:

  1. an amendment to end effective registration (including an amendment to remove the registration), because no collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party; or
  2. an amendment to omit the collateral, because particular collateral in which the person has an interest does not secure any obligation (including a payment) owed by a debtor to the secured party.

The recommended contents of an amendment demand are:

  1. This statement: "This is amendment demand which is provided under section 178 of the Personal Property Securities Act 2009."
  2. Date.
  3. The secured party's name.
  4. The secured party's address for service.
  5. The PPSR registration number.
  6. The Giving of Notice Identifier (if applicable).
  7. The amendment that is demanded and the reason it is authorised, with reference to section 178 of the PPS Act. For example:

7.1. an amendment to end effective registration (including an amendment to remove the registration), because no collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party; or

7.2. an amendment to omit the following collateral [state the collateral], because the person has an interest in that collateral and it does not secure any obligation (including a payment) owed by a debtor to the secured party.

  1. Any evidence which supports the statement made in paragraph 7.
  2. The name of the person who is making the amendment demand. If the amendment demand is made by a company, the full legal name of the company and the name, position and the capacity in which the person acts on behalf of the company.
  3. A return address to which the secured party may send any response to the amendment demand.

Amendment Statement

An amendment statement is a written document, in the approved form "Amendment Statement", which is provided to the Registrar by a person who has who has issued an amendment demand to a secured party at least 5 business days prior.

Amendment Notice

An amendment notice is a notice issued by the Registrar to a secured party of a registration in respect of which an amendment demand has been issued to the secured party. An amendment notice may be issued following the receipt of an amendment statement or on the Registrar's own volition. Amendment notices are discussed in further detail below.

3. Administrative Process

Overview

In general there are four stages of the amendment demand administrative process:

  1. the Amendment Demand
  2. the Amendment Statement
  3. the Amendment Notice
  4. the Registrar's Decision

The first step, the amendment Demand, is also a precondition to the judicial process for an amendment demand.

Use of the Administrative Process

In accordance with section 179 of the PPS Act, the administrative process for an amendment demand is only available in the following circumstances:

  1. the secured party has been given an amendment demand;
  2. no application for a financing change statement has been made;
  3. no proceedings are currently before a court, in relation to an application under section 182 (the judicial process), that relate to the amendment demanded; and
  4. the security agreement which provides for the security interest is not an instrument or document:
  5. by which a person issues or guarantees, or provides for the issue or guarantee of, an obligation secured by a security interest; and
  6. in which another person is appointed as trustee for the person to whom the obligation secured by the security interest is owed.

The administrative process will stop being available if:

  1. registered is amended (including removed) in accordance with the amendment demanded;
  2. proceedings come before a court, in relation to an application under section 182, that related to the amendment demanded.

Stage One - the Amendment Demand

The party seeking an amendment to a registration sends an Amendment Demand to the secured party at the address for service provided for the secured party in the registration. For further information regarding the definition and recommended contents of an amendment demand please refer to the key terms section above.

If the secured party is a deregistered company, the party seeking an amendment should also send a copy of the Amendment Demand to the Australian Securities and Investments Commission, Property Law Group, GPO Box 9827, Brisbane Qld 4001. Sending a copy to ASIC at this stage may help to expedite the process at later steps. Upon deregistration, the assets of a company vest in ASIC accordingly it is appropriate that ASIC is informed of the demand.

The secured party may respond to the demand.

Stage Two - Amendment Statement

If 5 business days have elapsed since the Amendment Demand was given and the secured party has not responded or their response did not include compliance with the demand, the party who sent the Amendment Demand may give an Amendment Statement to the Registrar.

An Amendment Statement is an approved form under the PPS Act which is available from the form page of PPSR website www.ppsr.gov.au. Amendment statements should be addressed to:

Personal Property Securities
Australian Financial Security Authority
National Service Centre
GPO Box 1944
Adelaide SA 5001

Alternatively, it may be sent via email to forms@ppsr.gov.au.

The Registrar will consider that an amendment statement is given and effective if it is in the approved form "Amendment Statement" and the form is complete. As noted on the approved form, it is not mandatory to attach the original amendment demand. However, applicants should note that in making a decision the Registrar will only have regard to the matters outlined in the heading "Stage 4 - Registrar's Decision" below. This includes the amendment notice. As noted above, if the amendment statement enclosed the amendment demand, the amendment demand will also be attached to the amendment notice. However, if the amendment statement did not enclose the amendment demand, the amendment notice will contain a statement to that effect.

Stage Three - Amendment Notice

Amendment Notice following Amendment Statement

Following receipt of an Amendment Statement which is complete and not otherwise defective, the Registrar will give an Amendment Notice to the secured party as soon as reasonably practicable. The secured party may respond to the amendment demand as set out in the Amendment Notice, within the period stipulated by the Amendment Notice.

If the secured party is a deregistered Australian company, the Registrar may also send a copy to the Australian Securities and Investments Commission inviting a response to the matters set out in the Amendment Notice.

As mentioned above an amendment notice is a notice issued by the Registrar to a secured party. Amongst other things, the amendment notice sets out the amendment demanded and invites the secured party to respond with the reason(s) why the amendment is unauthorised. An amendment notice will only be issued if an amendment demand has been given to a secured party.

In general, the Registrar will not issue an amendment notice unless the Registrar has received amendment statement which is complete and not otherwise defective. However, the Registrar may issue an amendment notice if there is evidence that an amendment demand has been given to the secured party and the Registrar suspects on reasonable grounds that the amendment is authorised.

The Registrar will give the amendment notice to the secured party, at the address specified in the registration for the giving of notice to the secured party, by:

  1. sending it to the address by pre-paid post, fax or email; or
  2. leaving it at the address.

The amendment notice will:

  1. State the amendment demanded.
  2. Invite the secured party to respond before the end of:

2.1. five business days after the notice is given; or

2.2. a longer period approved by the Registrar,
(the "response period").

  1. Set out the effect of section 181 of the PPS Act; that is at the end of the response period the Registrar must register a financing change statement amending the registration in accordance with the amendment demand, unless the Registrar suspects on reasonable grounds that the amendment is not authorised under section 178 of the PPS Act.
  2. If the amendment notice is in response to an amendment statement, attach a copy of the amendment statement. If the amendment statement enclosed the amendment demand, the amendment demand will also be attached to the amendment notice. However, if the amendment statement did not enclose the amendment demand, the amendment notice will contain a statement to that effect.
  3. Provide details of any other matter that the Registrar considers relevant.

In general the response period will be 5 business days. However, a longer period may be approved if appropriate. For example, if the amendment demand is extensive, sent only via post, or if the amendment notice is sent to the secured party within in 5 business days of the Christmas or Easter public holiday period.

Amendment Notice (Registrar's own volition)

The Registrar may issue an amendment notice to a secured party if the Registrar is satisfied that amendment demand has been given to the secured party and the Registrar suspects on reasonable grounds that the amendment demanded is authorised, in accordance with section 178 of the PPS Act.

In determining whether there are reasonable grounds to suspect that the amendment demanded may be authorised, and therefore that an amendment notice should be sent, the Registrar may have regard to the following:

  1. any information or matter contained in the amendment demand;
  2. any information contained in correspondence or records which relates in any way to the amendment demand;
  3. any information that is contained in the PPSR and readily available;
  4. any other relevant information.

Stage 4 - Registrar's Decision

Pursuant to section 181 of the PPS Act, at the end of the response period the Registrar must register a financing change statement to amend the registration in accordance with the amendment demand, unless the Registrar suspects on reasonable grounds that the amendment is unauthorised. The Registrar may also register a financing change statement amending the registration in accordance with the amendment demand before the expiration of the response period if:

  1. the secured party has responded; and
  2. the Registrar has no reason to believe that the secured party intends to give any further response.

In general, the Registrar will consider that there is no reason to believe that a secured party that has responded intends to provide a further response, unless the secured party states such an intention in the initial response.

However, the Registrar will not take any action under section 181, if the administrative process has stopped being available, that is if:

  1. the registration is amended (including removed) in accordance with the amendment demanded;
  2. proceedings come before a court, in relation to an application under section 182, that related to the amendment demanded (discussed further under the heading "Judicial Process" below).

In determining whether there are reasonable grounds to suspect that the amendment is authorised, and therefore whether a financing change statement should be registered, the Registrar will have regard to:

  1. the response (if any) of the secured party to the amendment notice; and
  2. any other relevant information.

4. Judicial Process

As an alternative to the administrative process (and in circumstances where the administrative process is not available), section 182 allows the both the secured party and person who made the amendment demand to apply to court for an order relating to the amendment demand.

The administrative process preconditions do not apply to the judicial process. However, a person who gave the amendment demand cannot make an application to court under section 182 before the end of five business days after the demand is given.

It is open for the Registrar to intervene in proceedings of this nature (section 218 of the PPS Act). For further information regarding the Registrar's approach to intervention in judicial proceedings see Registrar's Practice Statement No. 7 - Judicial Proceedings - Sections 218 and 219.

5. Removal of Data as a result of an Amendment Notice

Data removed from the PPSR because of an amendment under this section must not be made available for search in the PPSR by reference to any time before (or after) the time of removal, if the Court so orders; or if Registrar so decides.

The Registrar will not make data removed as a result of an amendment demand publically available for search in the register by reference to any time before (or after) the time of removal if, having regard to the information contained in the amendment notice and any response received from the secured party, the Registrar considers that the data was never accurate.

6. Note on practice regarding registrations migrated as "ALLPAAP - no exceptions"

Background

Many security interests were migrated to the PPSR with the collateral class "All present and after acquired property - no exceptions. For example all registrations that were migrated from the ASIC register of Company Charges were migrated with the collateral class of ALLPAAP. In many cases the underlying security interest may cover a narrower scope of collateral. For example, the migrated security interest may have been a fixed charge.

The selection of that collateral class occurred as a consequence of the data migration process - it was not a result of a choice by the secured parties involved.

Remedy

It is not possible to directly amend the collateral class of the migrated registration. The position can be regularised only by removing the migrated registration and re-registering the fixed charge with a link to the migrated registration to preserve its priority. This solution is likely to be impractical to implement on a large scale.

Searching

Details of the actual scope of the underlying security interest can be obtained by viewing the attachments to the migrated registration, which will usually comprise an ASIC Form 309 together with the security document.

Effect

Section 337A of the Personal Property Securities Act 2009 limits the effectiveness of a transitional registration to only that collateral covered by a transitional security agreement. The effect of this provision is to make clear that it would not be possible for a secured party to rely on a migrated "ALLPAAP- no exceptions" registration to assert an interest in collateral which is not covered by the security document underlying the migrated registration.

7. Registrar's comments

The Registrar encourages interested parties first to review the attachments to the migrated registration. They may decide that provides sufficient comfort as to the scope of the underlying security interest.

However, the Registrar understands that, as a matter of practice, parties may request and provide (on a voluntary basis) advices of 'no interest' in respect of particular collateral. Such advices may, for example, be provided by an existing financier at the request of a buyer or another financier in order to provide additional assurance that the other party will not be adversely impacted by the pre-existing registration with the 'ALLPAAP- no exceptions' collateral class.

Using searches, and such advices where appropriate, rather than requiring the pre-existing ALLPAAP registrations to be replaced, is likely to significantly reduce the costs associated with transitioning to the PPSR.

8. Further information

Enquiries about any of the matters discussed in this practice statement may be directed via email to enquiries@ppsr.gov.au.