The new Personal Property Securities Register begins from today, and businesses are continually being warned to read up on as much as they can in order to avoid missing out on registering their interest in securities.
Legal experts have warned SMEs that any business supplying goods should be aware the new register replaces several state-based registers and that should a client or subsidiary become insolvent, businesses will need to register their interest in specific assets.
“It gives businesses which have never had that chance to be sure about their assets have that ability. So if you’ve got assets in a business, such as two pallets of metal or whatever, you’ve never had the ability to secure your assets should that business go broke,” Veda commercial risk expert Moses Samaha told SmartCompany.
“We’re all accustomed to having mortgages, but outside of that people extend credit outside of loans, so it’ll have quite a profound impact on businesses.”
The register is designed to act as a sole register for any form of personal property security.
The register dictates any personal property security is a form of property other than the land, buildings or fixtures which form part of that land. This includes assets such as cars, other plant and equipment, and intellectual property.
A personal property security occurs when a secured party, such as a bank, takes an interest in personal property as security for a loan or any other type of agreement that includes the use of secured finance.
If you register, you’ll be treated as a secured creditor, as opposed to an unsecured creditor, if a debtor falls into insolvency.
While registers for those assets already exist, they will now be migrated over the PPSR. It means more than 40 current registers, including the Register of Ships, Register of Encumbered Vehicles, the Security Interest of Goods Register and each states’ vehicle securities registers, will now be included in the PPSR.
Transitional arrangements have begun, but businesses still need to be aware they can register their interest in securities now, with a number of state-based registers already being replaced.
“It’s been tough for businesses to really appreciate what this is all about. It forces them to get certain information for certain registers, such as specific information on individuals involved, and unless you’re in the know-how, how do you keep connected?
Samaha says there are a number of actions businesses must take to stay ahead of the game.
“Every business needs to review its trading activities. “You need to look at documentation, if you register a security interest, review your contacts and determine when you’ll need to use the register.”
“From today, people need to know about the changes. If you were getting stuff out of the old registers, with the new PPSR it’s going to cost slightly more and you’ll need to know about those changes.”
He also warns businesses need to start training their staff. “Your employees need to know about what’s going on,” he says, “it will be important these changes are taught to everyone involved in relevant roles.”
Businesses should also visit the PPSR sites and familiarise themselves with all the new methods for registering. And as Samaha explains, it’s a critical time to get a leg-up on the competition.
“This is an opportunity to take the advantage in the market, secure your pecking order should one of your customers or clients become insolvent or defaults. Once you register that interest, you have a much better opportunity.”