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Why is it important?

In October 2011, the Personal Property Securities Reform (the PPS Reform) will commence and a single national online register of security interests in personal property (the Register) will be operational. The key piece of legislation is the Personal Property Securities Act 2008 (Cth) (the PPS Act or the Act).

Without a doubt, this will have a profound impact upon the general business community both in the short and long term. Any business that supplies goods (whether by way of sale, or by way of lease or even by way of bailment) faces a real risk of suffering significant losses in the future if it does not come to grips with the reform and take the necessary steps to protect its rights.

Conversely, businesses that do make appropriate use of the Register will reap real benefits by being able to enforce rights over personal property in ways that have not been previously available.

Why has it come about?

The law governing the title to and security over personal property has developed in a fragmented and haphazard manner. Apart from various general law principles, there are a plethora of State and Commonwealth statutes that govern personal property rights, and numerous registries (both State and Commonwealth) where security interests can be registered. For anyone seeking to take a security interest or search for other security interests, it can be a challenge just to locate all relevant registries. Most registries are not electronic and require manual lodgment and searching. There is an enormous potential for gaps, overlaps and conflicts between different systems.

The PPS Reform replaces all of the different registers with a single national electronic register, and a single body of law that sets out in detail the rules governing proprieties between competing security interests.

What is it?

At the simplest level, the PPS Reform consists of:

  • A single, national, electronic, register (or public noticeboard) of 'security interests' in personal property manged by ITSA; and
  • A new rule-based system to determine priorities between competing security interests, i.e. one or more security interests that are attached to the same item of personal property.