Client Update: PNG personal property security reform enacted
7 February 2012
In brief: Personal property securities reform has passed into law in PNG but will not come into force until a security interest registry is established. Partners Steve Pemberton and Vaughan Mills look at the implications of the new law for doing business in PNG.
The Government of Papua New Guinea has announced that the country's new Personal Property Securities Act was passed into law by Parliament on 9 December 2011. When implemented, the Act will reform the law relating to security over almost all property except land, and will establish a single register for security interests. The register will cover not just 'traditional' security interests such as mortgages and charges, but also other transactions (such as retention of title arrangements and some leases) which have economically similar effect.
In September 2011, we published a Focus describing the proposed law. The Act as passed is very similar to the draft Bill that had been circulated for comment, though some changes have been made as a result of submissions received. Once change is particularly relevant to the mining and oil and gas industries: the Act will now not apply to security interests in mining tenements or petroleum licences.
The new Act is not in force yet, and will not commence operation until the new registry has been established. The PNG Government is now embarking on an implementation phase, which will include procurement and establishment of the registry system along with a public information process. The Government expects around six to nine months will be required for this implementation phase.
Once the Act commences operation, parties will have six months to register existing security interests, or risk losing priority.
Companies with operations in Australia will be aware that these periods are significantly shorter than the equivalent periods for Australia's recently-commenced PPS law, which were around 25 months from enactment to commencement, and a two-year transition period for registration of existing interests. Further, unlike Australia, PNG apparently does not propose to provide for automatic 'migration' of security interests already registered under existing laws, such as registered company charges.
We are engaged in reviewing the law in more detail, and will publish further information in the coming weeks. If you would like to discuss the new law or its impact on your business or operations, please contact one of the people below.
- Vincent BullConsultant,
Ph: +67 5 305 6000
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