As mentioned in our August 2009 Update, the Committee recommended the passing of the Personal Property Securities Bill 2009 (PPS Bill) on the basis that a consequential amendments bill be passed to deal with those issues raised in the Submissions to the Committee's 2009 Inquiry which the Government proposed to accept.

The Personal Property Securities (Consequential Amendments) Bill 2009 (Amendment Bill) was released to the House of Representatives on 21 October 2009. This Update highlights the progress that has been made in relation to the implementation of the PPS regime and the matters dealt with by the Amendment Bill.

Status Of Referring Legislation

In order for the PPS regime to operate on a national basis, each State is required to pass referring legislation allowing the Federal Government to administer the PPS Bill.

Such referral legislation has been passed in New South Wales, Queensland, Victoria and South Australia and it is likely that the other States will introduce their referral legislation in the near future.

Clearly, progress is being made to have in place a national framework in time for the proposed commencement of the PPS regime (currently May 2011).

Amendment Bill

The Amendment Bill deals with two matters being:

  • Modifications to other legislation (other than the Corporations Act 2001) to harmonise language and concepts with the PPS Bill and ensure that there is no conflict between the PPS Bill and such other pieces of legislation. The laws to which these provisions extend include intellectual property laws (being the Designs Act 2003, the Patents Act 1990 and the Trade Marks Act 1995).
  • Various individual amendments to the PPS Bill itself.

Amendments To Other Legislation

Although we applaud the Attorney-General's endeavours to clarify how the PPS Bill will operate in association with other legislation which impacts on matters dealt with by the PPS Bill, the Amendment Bill was released without including the changes relevant to the Corporations Act 2001. As the PPS Bill is intended to replace the charges provisions of the Corporations Act, those amendments will be fundamental to the PPS Bill achieving the desired policy outcome. The Explanatory Memorandum provides that the amendments to the Corporations Act will be done by way of a separate bill following a public consultation process.

This implies that there will be a further consequential amendments bill to the PPS Bill. In addition, regulations will need to be released in order to fully understand the operation of the PPS regime. We expect that upon commencement of the PPS regime, a consolidated Bill will be available to assist readers to understand the legislation.

Amendments To The PPS Bill

In relation to the amendments made to the PPS Bill, we note that none of the more significant issues raised in the submissions to the 2008 and 2009 Inquiries have been included.

Although a number of the issues raised relate to policy, in respect of which the Government has clearly made its choice, other matters go towards making the PPS Bill operate as intended.

For example, section 160 of the PPS Bill provides that a registration will be effective once the description of the collateral the subject of the security interest can be searched by reference to the 'secured party'. As the secured party is the holder of the security interest, this section requires amendment as searches will be done against the name of the grantor of the security interest, not the financier. This is consistent with all searches done on other registers and records. We have raised this matter in our submissions to both Inquiries and expect that this and other matters will be identified and dealt with by way of further consequential amendments to the PPS Bill.

What Should You Do Now?

Although further changes are likely to be made to the PPS Bill, the main provisions of the Bill appear to be now finalised. This will assist parties in considering how the new regime will impact on their business.

Clearly, given the complexity of the PPS regime, it is essential that financiers and other parties who will be affected by the PPS regime start considering their documents and procedures so as to be ready for the new regime upon its commencement. We recommend that you take advantage of the long lead time available to understand the operation of the PPS Regime and suggest you seek advice on how the regime will apply in common scenarios relevant to your business.

© DLA Phillips Fox

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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.