PPS Act – Simply Explained

The PPS Act is the legislation that replaces more than 70 existing Commonwealth with a single national law. It introduces a national online register called PPSR Register, for the registration of all security interests.

How will the PPS Act impact my business?

Failure to comply with the new PPS laws can have severe consequences including a inability to recover goods sold or to recover payment through realising  secured assets.

However the PPS regime may also benefit your business by giving a better opportunity to enforce security interests and to recover payments which are currently difficult and in some cases impossible to enforce.

The PPS Act applies to security interests in personal property. Personal property is a tangible and intangible property. For example the stock, raw materials, motor, boats, machinery, plant, crops, shares, intellectual property and receivables. Security interests include retention of title clauses, fixed or floating charges, chattel mortgages, hire purchase agreements, consignment agreements and certain leases of goods.

The following arrangement are expressly carved out of the new PPS regime. Interests of a seller who has shipped goods under a negotiable bill of landing, liens that arise under statute or general law, interests in land or payments in connection with land, transfer of accounts for collection purposes, transfer of an account or negotiable instrument in order to satisfy existing indebtedness, superannuation interests.

All Personal Property which is the subject of a security interest will now be known as collateral.

A retention of title security interest will now be known as a Purchase Money Security Interest.

A lease of personal property for more than 1 year or for an indefinite period of time is PPS Lease. For vehicle leases to be categorised as PPS Lease this period is just 90 days.

A fixed and floating charge will be known as Circulating Asset.

If a security interest in collateral is perfected it takes priority over another security interest that is not perfected or subordinate. A security interest is perfected if it has attached to collateral and certain extra steps have been taken to protect the interest or the interest is perfected by virtue of the PPS Act.