INSIGHT

PPS deregulation measures one step closer

By Karla Fraser
Banking Financial Services Financial Services Royal Commission Securities & Alternative assets

In brief

A long-awaited change designed to reduce the compliance burden for security interests arising from short-term leases of serial numbered goods is one step closer to becoming law. Partner Karla Fraser and Law Graduate Katharine Ward report.

Background

The Personal Property Securities Act 2009 (Cth) (the PPSA) deems certain arrangements, including 'PPS leases', to be security interests. A PPS lease is defined in subsection 13(1)(e) of the PPSA to include a lease or bailment of serial numbered goods for a term of 90 days or more.

On 25 June 2015, the Personal Property Securities Amendment (Deregulatory Measures) Act 2014 received Royal Assent. Under the amending Act, the PPSA will be amended to remove subsection 13(1)(e) in relation to a lease or bailment of serial numbered goods for a term of 90 days or more.

What will change

This amendment will:

  • simplify the operation of the deeming provisions under the PPSA: in particular, in relation to PPS leases. From the commencement of the amendment, there will be only a single threshold for deeming certain transactions to be PPS leases – leases or bailments for a term of more than 12 months or an indefinite term (regardless of the type of goods leased or bailed);
  • reduce the complexities (and compliance costs) for businesses in determining whether a short-term lease should be registered; and
  • bring the PPSA into alignment with the PPS regimes in other countries, such as New Zealand and Canada.

A recently published report on the review of the PPSA recommended the implementation of this amendment.1

Timing

The commencement date for the proposed amendment is not yet certain. The change will take effect on the earlier of:

  1. six months from the date of Royal Assent (ie 25 December 2015); or
  2. an earlier date to be fixed by proclamation.

No earlier date has been proclaimed at this stage.

Next steps

In preparation for this change, businesses may wish to review existing policies and processes in relation to registering PPS leases over serial numbered goods, and ascertain what changes should be made to their policies once the proposed amendment becomes operational.

If you would like to discuss the proposed amendment, or its impact on your business or operations, please contact one of our PPS experts.

We will provide a further update once the proposed amendment takes effect.

Footnotes

  1. Attorney-General's Department, Consultations, reforms and reviews, 'Statutory review of the Personal Property Securities Act 2009', (18 March 2015).