The Registrar of the Personal Property Securities Register has
today confirmed that the commencement date for the Personal
Property Securities Act 2009 (Cth) (PPSA)
will be delayed further, although the exact date for commencement
is still to be determined. We understand that such deferral is
primarily due to certain IT systems required for the effective
operation of the PPS register not being fully operational in time
for the previously suggested start date of 31 October 2011.
Interestingly, under the terms of the PPSA itself (section 306),
the Registration Commencement Time (RCT) is stated
as being the start of the first day of the month that is 26 months
after the month in which the PPSA is given Royal Assent or an
earlier time determined by the Minister. As Royal Assent was
given to the PPSA on 10 December 2009, these provisions have the
result that the RCT is to be no later than 1 February 2012.
Having regard to the reasons for the delay, if the further delay is
to extend the RCT beyond 1 February 2012, it will be necessary for
the PPSA to be amended to provide for a start date beyond the date
referred to in section 306.
Financiers' PPS requirements
It is now becoming common practice for financiers
to include various PPSA covenants in their financing and
banking documents. To the extent that a borrower conducts a
business that is impacted by PPSA, it is both in the borrower's
and the financier's interest that the borrower comply with
the PPSA to shore up the value of its assets, which comprise
security interests.
By including such covenants in financing documents, borrowers risk
going into default with their financiers if they do not comply with
the PPSA. Given the volatility of financial markets, it is in
the interests of borrowers to avoid going into default with their
financiers (particularly listed entities that may need to disclose
such default to the market).
Take advantage of the delay
Although large financiers and many of the larger suppliers of
goods on retention of title terms have obtained the required advice
and implemented the changes necessary to their processes and
procedures to be able to comply with the PPSA on its commencement,
a significant number of businesses have not yet done so.
This latest delay therefore provides those parties who may be
adversely affected by the operation of the PPSA with a further
period of time in which to bring themselves up to speed as to the
impact of PPSA on their operations. To assist in this, we
have updated our PPS Checklist (download above), which includes
circumstances that should be taken into account when assessing
whether or not PPSA is important to your business.
If you would like to discuss how PPSA will impact on your business,
please do not hesitate to contact one of our PPSA team.
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