The Personal Property Security Register (PPSR) is an increasingly prominent tool for businesses, particularly for those that supply goods on credit or that lease/hire out goods to other businesses. But many businesses still do not understand the PPSR or how to apply it effectively.
The PPSR is an on-line noticeboard on which a person, who obtains an interest in another’s personal property as part of a transaction that secures payment or the performance of an obligation, can register their interest for the world to see. Personal property does not include land and fixtures but does include things like motor vehicles, household goods, plant and equipment used by a business, the inventory of a business, intellectual property and company shares.
By way of example, a supplier of equipment to a business that retains title to the equipment until it is paid in full will want to properly register a security interest on the PPSR over that equipment in the hands of the business until it is paid. If the business becomes insolvent, the supplier will only need to appoint a liquidator of the business to the PPSR in order to establish its title to the equipment.
Changes to the legislation behind the PPSR came in to effect on 1 October 2015 that particularly impact on those businesses that lease out goods that are required to be registered on the PPSR by serial number – motor vehicles, watercraft and aircraft most commonly. Until last week, a lease of a motor vehicle for more than 90 days would require registration on the PPSR if the lessor wished to properly protect its interest in the motor vehicle. Relevantly, the definition of “motor vehicle” captures a broad range of items that might not normally be considered to be motor vehicles.
From 1 October 2015, only leases of motor vehicles for effectively more than 1 year will have to be registered on the PPSR to properly protect the lessor. That change simplifies matters for the lessors of such goods but adds some uncertainty to those involved in a business sale who might be seeking to understand which assets of a business are in fact secured to or owned by a third party.
The PPSR is not easy to understand. At Everingham Solomons, we can assist you understand its application to your business because Helping You is Our Business.
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