A PPSA Registration Primer

Article excerpt

[The Personal Property Securities Act 2009 (Cth) ('PPSA) came into effect on 30 January 2012. Among other things, the PPSA introduces a comprehensive new registration system for security interests in personal property. This article explains the elements" of the PPSA registration system, with particular reference to how it differs from earlier registration systems including the provisions governing registration of company charges in ch 2K of the Corporations Act 2001 (Cth) and the registration requirements" in the state and territory hills of sale and motor vehicle securities statutes. The article also explores similarities and differences between the Australian PPSA registration system and the Canadian and New Zealand systems.]

CONTENTS

I   Introduction
II  Pre-PPSA and PPSA Registration Compared
        A Introduction
        B Unification
        C Centralisation
        D Notice Filing
            1 Overview
            2 Storage Costs
            3 Search Costs
            4 Privacy
            5 Advance Registration
            6 Blanket Registrations
        E Computerisation
        F Registration Renewals
III Searching the Register
        A Debtor's Name (Grantor Details) Searches and Serial
          Number Searches
        B Grantor's Details Searches--Individual Grantor
        C Grantor's Detail Searches--Corporate Grantor
        D Serial Number Searches--Consumer Property
        E Serial Number Searches--Commercial Property
        F Restrictions on Access to the Register
        G Follow-Up Inquiries
IV  Registering a Financing Statement
        A The Mechanics of Registration
              1 The Registration Process
              2 Financing Statement Contents
              3 The Collateral Description
              4 Other Noteworthy Financing Statement Matters
              5 Verification Statements
        B Registration Errors
        C Registration Amendments
              1 General
              2 Transfer of Collateral
              3 Change in Grantor's Details and Other Particulars
V Conclusion

I INTRODUCTION

The Personal Property Securities Act 2009 (Cth) ('PPSA') came into effect on 30 January 2012. (1) Based in part on Canadian provincial legislation, (2) and also on Article 9 of the United States Uniform Commercial Code ('UCC'), (3) the PPSA is one of the most significant developments in Australian commercial law over the past half century or more. The PPSA applies to every transaction that in substance creates a security interest, without regard to the actual form the parties choose, and it addresses every aspect of secured lending, including the formation of security agreements, publication of security interests, priority between competing claims to collateral and remedies for default. At each of these stages, the PPSA enacts a more or less common set of rules for all secured transactions. In this respect it differs markedly from prior law, which was both piecemeal and dominated by considerations of form. (4)

Publication of security interests is a central PPSA objective. (5) Publication is important, serving as a means of protecting third parties from being misled into believing that the debtor (or 'grantor', to use the Australian PPSA terminology) (6) has unencumbered title to its assets. The PPSA uses the term 'perfection' to capture the publication idea, and it provides for various methods of perfection including 'possession' and 'registration'. (7) Possession achieves the publication objective because if the secured party holds the collateral, a prospective third

party claimant should realise that the secured party may have an interest. (8) On the other hand, it would be commercially disruptive if possession were the only permissible method of publication, because typically the grantor will need the collateral to earn income to repay the secured party. In other words, there are two competing policy considerations in play: (i) the need to facilitate non-possessory secured lending; and (ii) the need to protect third parties. …