Register your PPS interests – Update

Personal Property Securities Bill 2009

Are you the operator of a business that:

  • uses retention of title clauses in sale agreements
  • sells on consignment
  • sells goods with serial numbers, including motor vehicles
  • supplies goods via hire purchase or equipment lease
  • is a “factoring” business (purchases accounts receivables from other businesses)?

If so, you should be aware of the reforms to the PPS Register that brings the different Australian Government state and territory laws and registers for security interests in personal property under one national system.

Why PPS reform?

The old PPS registration regime in Australia was patchy and differed from state to state. Because of this, suppliers and lenders were reluctant to accept anything other than land or motor vehicles as security for borrowings or for delayed payment arrangements. Historically it was risky to accept personal property as security – personal property includes cars, boats, machinery, shares, contractual rights and intellectual property.

The reform aims to tighten the registration regime so that lenders, credit providers, and people who accept personal property as security as part of their business operations can better secure their position in the event of a default by the other party. In this way, the regime will improve the ability of individuals and businesses, particularly small-to-medium size businesses, to use all of their property in raising capital.

The two key elements of protecting your business under this regime (by protecting your interest in the personal property security) are:

  1. ensuring that your documentation complies with new PPS legislation; and
  2. registering your interest in the property on the new register.

A national Personal Property Securities Register  introduced that is computer-based, updated in real time and accessed publicly. Failure to register could give other registered creditors priority to seize and sell personal property from defaulting debtors – there were cases of entities getting caught out and losing their security altogether when similar legislation was introduced in NZ.

It is essential that supply contracts, leasing contracts and consignment agreements be overhauled to accord with the Personal Property Securities Act, and to allow for registration of the supplier’s interest. Equipment leases, consignment agreements, and contracts with individuals do not currently fall under the PPS regime but will under the act (excluding short-term rental arrangements). Systems and processes in all leasing businesses need to be reviewed to ensure that all relevant agreements (not just leases of vehicles that REVS currently captures) are registered, and IT systems should  be upgraded to communicate with the PPS register and record the registration. Staff will need training in relation to the new regime.

Factoring businesses will be greatly affected by the new regime – purchasers of receivables may not gain title to the receivable, and can lose their security or their ranking if they do not ensure that the purchase of the receivable is entered into and perfected in accordance with the PPS legislation.

Manufacturers and product suppliers who use retention of title clauses will find that all existing rules and case law about these clauses are overturned by the new regime. Instead of a supplier or manufacturer retaining title in goods until full payment is made, the buyer of the goods assumes title and the supplier’s interest is a secured interest. Compliance with the new legislation and effective registration is of utmost importance because a supplier or manufacturer will not be able to take legal action as if they still have a right of ownership to the goods. However, the PPS regime does give a supplier with a compliant, registered retention of title clause a higher ranking priority position to other claimants.

You may also have PPS contracts that are currently registered such as charges on the ASIC company register, or a bill of sale in NSW against an individual. It is intended that these interests will be migrated to the new PPS register, but businesses will need to identify these security interests and ensure that they have been properly migrated.

“All assets” charges will continue to exist – however there will be an increased number of instances in which you as a secured party may lose priority and thereby lose out to another creditor coming later in time, despite the later creditor having knowledge of your  earlier interest. “All assets” charges must be properly constructed to ensure that you are protected.

Under the new regime, documentation that complies with PPS legislation and effective registration are the two important guarantees to good security, regardless of when your security came into being and how it was worded. Timing is critical, and if a competing creditor beats you to register, you will lose priority. If a debtor becomes insolvent, your security may fail altogether if it does not comply with the PPS legislation or it is not properly registered.

For more information or to make and appointment contact our Business Services team:

p: 02 6206 1300 | e:



1. Personal Property Securities Amendment (Registration Commencement) Bill 2011;fileType=application%2Fpdf#search=%22r4686%22

2. S Bowers, ‘Securities register hits hitch’, Australian Financial Review, 2 September 2011, p. 21,;query=Id%3A%22media%2Fpressclp%2F1050762%22