Sixty-five percent of businesses have 'not heard of' PPSA

MSI Global Alliance’s November 2011 ‘Business Impact survey’ of 570 Australian business owners and managers reveals that 65 per cent of businesses have not yet ‘heard of or read about’ the Personal Properties Securities Act 2009 (the PPSA) due to come into effect on 30 January 2012. The PPSA has been heralded as one of the most significant pieces of legislative reform for Australian business in many years.

The impending PPSA regime will have an impact on businesses that sell goods to customers on credit terms or lease goods to customers, thereby retaining a secured interest in the goods sold. The regime will also impact businesses that offer secured loans to their customers. Under the PPSA regime businesses must register their security, or ownership, interests on a new, national Personal Properties Securities Register or risk losing their rights to property in possession of another entity in the event of liquidation. Under the new regime, the priority of secured creditors in the event of insolvency will change.

With this in mind, 35 per cent of those businesses who said they have not heard of the PPSA currently sell goods to customers on credit terms and almost 10 per cent are currently leasing goods to customers. These businesses and thousands like them around Australia will need to become conversant with the new registration regime.

MSI Global Alliance spokesman, Alec Blacklaw commented on the survey:

“For such an important piece of legislation, albeit one that has suffered a few false starts in terms of implementation (hence the 2009 date on the Act), it is a wonder that 65 per cent of business owners are still unaware of the PPSA.

“It is likely that most businesses operating today will consider that they have watertight contracts, terms and conditions of business and the like which cement their ownership rights in the event of a default or a company entering liquidation.

“Under the PPSA regime, that will not be enough. The reality is that in the event of a default there may be many others in the ‘queue’ to recover debts or property who may allege that they rank ahead of you. The PPSA is designed to give clarity and consistency to the ‘queue’ – but the key to this is the correct and proper registration of the security interest in the property in the first place.”

To make ready for the Act, the first thing business owners need to do is find out if it will affect their businesses. Businesses will need to carefully consider specifically how, under the new regime, they protect any ‘personal property’ which they own or which they have an interest in. This may include seeking appropriate advice to assist with:

1.Reviewing trading activities and checking standard terms of supply, financing arrangements and contracts;

2.Identifying the assets which are affected and property which needs to be registered on the Personal Property Securities Register (PPSR) to ensure priority (as in most cases a registered interest will have priority over an earlier unregistered interest);

3.Redrafting standard terms and preparing new internal procedures for registering interests.

The Federal Attorney General announced last week the commencement date for the PPSA as Monday 30 January 2012 at which point a 24 month transition period will commence. However, the Senate has passed a bill which gives the Attorney General further flexibility to delay the commencement date.

For more information or to arrange an interview, please call Maree Schneiders on 0411 446 484 or maree@strategyco.net

Defining‘personal property’ under the PPSA:
‘Personal property’ includes virtually any property which is not real property or fixtures. It may include money, goods, motor vehicles and intellectual property.

About MSI Global Alliance

MSI Global Alliance (MSI) is one of the world’s leading international alliances of independent legal and accounting firms, with over 250 member firms in 100 countries.

In Australia and New Zealand MSI consists of 12 independent legal and accounting firms that provide specialist services to local and overseas businesses.

As a group MSI members are committed to serving companies and individuals both in Australia, New Zealand and around the world.

For further information about MSI in Australia and New Zealand, visit www.msi-anz.net