Australia: Australia To Reform Personal Property Securities Law

The Commonwealth Attorney-General's Department has confirmed that reform of Australia's Personal Property Securities law remains an active item on the Government's legislative agenda. An exposure draft of a Personal Property Security Bill is now well advanced and will be released for public comment in the near future.

In its 2007 Budget, the Australian Government allocated $113 million towards the reform of the law of Personal Property Securities (PPS) in Australia. PPS reform was endorsed by the Council of Australian Governments as part of the Australian regulatory reform agenda in 2006.

In the first half of 2007, the Australian Attorney-General's Department released three Discussion Papers on PPS reform. DLA Phillips Fox has closely followed this reform agenda, and our PPS reform team discussed the option papers with the Attorney-General's PPS Team.

While PPS reform is new to Australia, there have been major PPS reforms across the Tasman in New Zealand, as well as in a number of Canadian provinces. New Zealand revised its PPS laws and established an integrated PPS online register in 2002. DLA Phillips Fox in New Zealand actively assisted a range of clients with these reforms through Board and senior executive briefings, training materials, redrafting of security documentation and legal advice on a myriad of transitional and implementation issues arising from the 2002 New Zealand PPS reform.

With the imminent release of a draft exposure Bill, and with PPS reform touching all sectors of the Australian economy, every business in Australia needs to be on top of this issue. They must understand the impact that this reform may have on them, and they must ensure that their industry associations and other lobby groups represent them effectively in responding to the draft exposure Bill. The Bill will seek to consolidate and streamline over 70 different pieces of legislation across Australia that govern the registration, priority and extinguishment of security interests in property other than land.

The Australian Attorney-General's Department has advised us that following the release of the draft legislation, it is intended that a series of public forums and other stakeholder meetings will be held. DLA Phillips Fox will be an active participant in this process.

A key ingredient of the Australian PPS reform is the establishment of an online Personal Property Security Register. The Register will consolidate many (but, we note not all) of the current federal and state based registries of security interests (eg it will replace the ASIC register of company charges and State-based registers of interest in motor vehicles, goods, crops and other items). A tender to build the Register will be released shortly.

What you should do

We strongly recommend that you identify a key executive to take responsibility for monitoring developments and briefing your senior executive team and Board on the impact of PPS reform on your business.

PPS reform will affect much of your contract documentation where you wish to retain a security interest over goods and services that you supply to your customers. It will also affect your business processes and policies, including your approach to security in respect of finance transactions, due diligence when buying or selling a business, and dealings in financial instruments.

We can help you prepare for PPS reform

DLA Phillips Fox has a PPS team that will keep you informed of developments in relation to these important legal reforms. Our New Zealand experience and track record will be of significant benefit to you, both in assisting with submissions and responses to the draft exposure Bill, and in implementing the Australian reforms.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.