Does your business borrow or lend money? Purchase or sell goods on agreement, consignment or credit? Grow crops or raise livestock? Own or lease machinery or vehicles?
If so, then the upcoming Personal Property Securities Reform will likely affect you.
Currently there are numerous stand-alone State and Commonwealth registers of security interests for example the Register of Encumbered Vehicles (REVS), the ASIC Register of Company Charges, crop and livestock registers, shipping registers and bills of sale registers.
These existing registers will close in early 2012, to be replaced by one national online Personal Properties Securities (PPS) Register. Some existing data will be migrated across to the new database.
On the one new site, secured parties, purchasers and private users, the finance industry and motor vehicle traders will have the ability to search and verify that they are acquiring personal property which is debt free in all States and Territories.
The Personal Properties and Securities Register will cover personal property such as cars, art, machinery, crops, intellectual property and contract rights. Personal property does not include land, buildings or fixtures which form part of the land.
If you supply or receive goods on credit this PPS reform will make significant changes to the way your business uses secured lending in the supply of goods and services. Prior to the reform, you may have relied on a statement in an invoice to secure the retention of title in the goods supplied on credit. Relying on terms of trade will cease at the introduction of the PPS Register. Registration of the security interest will provide better protection.
There are two reasons why you would register a security on the PPS Register. Firstly this will protect the position of the party with the security interest in the property over others who may take an interest in the same property at a later time. Secondly, a registration on the PPS Register will protect your interest in that property in the event that someone you transact with becomes insolvent.
Businesses will need to prepare for the reform now, ahead of the early 2012 launch. We can assist you with all aspects of the change to ensure your operations are not impeded. Documentation will need to be revised to accommodate the new legal terminology and practices. Organisations that do not have possession of their personal property, for example stock and equipment supplied or hired to customers will need to have a security agreement in place that satisfies the new requirements of the legislation. It is recommended that users set up an account to access the PPS Register once it is launched. Some existing registers will not be migrated across to the new Register, and we can provide more specific advice to those affected on how to manage a transition.