Report on PPSA Review to be Tabled in Parliament
Macks Advisory suggests business owners, managers and their advisers keep a sharp lookout for the report on a review of the Personal Property Securities Act 2009 (PPSA) that should be tabled in the Federal Parliament no later than 18 March 2015. Thereafter the report, required by section 343 of the Act, can be seen on the Parliament of Australia website.
A Personal Properties Security Register (PPSR) was established under the Act in 2012, its aim being to register a person’s or a business’ security in a company for various reasons, especially in the event of the company’s insolvency.
Initially everyone involved thought the new regime was bound to work well because it reduced complexity and legal battles by having all secured interests listed together on a single public register. But problems began to arise to an extent the Federal Government believed changes were necessary.
Herewith the process
Debate on a Bill to amend the PPSA was adjourned last year in the Federal Parliament, soon after which the Attorney General invited submissions for a review. The review’s terms of reference embraced Government-required specifics, other broad areas of concern about impacts of the Act on business and consumers, together with technical issues (involving simplification of the Act’s language and efficiency of the regime).
Submissions relating specifically to small business issues closed on 6 June, 2014. Those on all other matters were accepted until 25 July 2014.
A report from the reviewer was due for completion by the end of January for tabling in Parliament (as mentioned earlier) on, or some time before 18 March.
But at least by 18 March, everyone associated with secured lending against personal property - an important element of the Australian credit market and the broader economy - will have a good idea of whether proposed improvements to the PPSA are heading in what they consider to be the right direction.
Some further background
The PPSA created a single national regime for secured finance using personal property to replace a complex and fragmented legal system that included more than 70 Commonwealth, State and Territory statues plus general law rules.
The regime, after more than two years of operation, clearly lessens paper work for business owners and the amended Act is further aiming to reduce the number of PPSR registrations necessary when a business hires or leases out serially numbered goods for more than 90 days. Not infrequently this has run to 400 or more registrations for a single business.
Nevertheless it’s proposed the amended Act should apply to all leases for a term greater than 12 months and to all finance leases whatever the term.
Currently the Bill before Parliament proposes to temper some of the harshness of the original regime and reduce the number of required registrations of property.
Indeed, the judiciary has been notably reluctant in some instances to have to uphold existing legislation. One judge, obviously unhappy with a recent ruling the current Act required him to make, referred to his judgement as “a seemingly draconian result”. More on that later.
Yet financiers generally agree the regime makes it easier for them to perform due diligence, particularly because potential borrowers have fewer commercially negligible registrations against them on the PPSR.
For more information on, or questions about the PPSA contact Macks Advisory on 08 8231 3323 or visit our office at Level 11, 99 Gawler Place, Adelaide SA 5000.
