As a business, when you buy, sell, lease or hire out goods, or sell on consignment, you may have taken the option to register personal property on the national Personal Property Securities Register (PPSR).
If you did, then read on. It may be time to act, review and renew, before it’s too late. If you didn’t, you should consider using it as it offers excellent risk protection for your business. The PPSR is the single, national online database of security interests in personal property in Australia.
Natural expiry of PPSR registrations
On 30 January 2019 the PPSR turned seven years old, meaning that any seven-year security interests which were registered at or around the time of the commencement of the Register have now begun to naturally expire. Even where a security holder does not believe that the 30 January ‘deadline’ applies to them, it is important to remember that many PPSR registrations were automatically transferred from other registers (one significant and relevant example is the Australian Security and Investments Commission Register of Company Charges).
Duration of PPSR registrations
In the process of registering a security interest on the Personal Property Securities Register (PPSR), a period of time must be nominated to specify the intended duration of the registration. The available options are: seven years or less; more than seven years but less than twenty-five years; or no stated end time. In the case of registrations over goods with a serial number, for example, motor cars and watercraft, registrations may not exceed seven years in duration.
What is the risk?
There is no notification that a security interest is due to expire, so it is essential that security holders take steps now to review and, if required, update their registrations. An expired registration cannot be extended or renewed, exposing its holder to the risk of becoming an unsecured creditor. Also, whilst it is possible to re-register an expired registration, the holder is then at risk of losing their existing priority to creditors with earlier registrations.
What to do?
The Australian Government PPSR website currently provides a free service for checking PPSR Registrations. By logging into the Register and providing certain details, holders of security interests are able to generate a ‘Registrations due to expire’ report, providing a list of registrations that are due to expire within a specified time period. In this way, holders are able to monitor registrations that are due to expire and require renewal, to review whether any security interests require extension or amendment, and also to identify any security interests which are no longer required and can be discharged.
The PPSR may be relevant to your business if you:
- sell, hire, rent or lease on terms
- buy or sell valuable goods, including second-hand goods
- want to raise finance using stock or other personal property as collateral, or vary or discharge any funding and security arrangements.