PPSR – The importance of correct and timely registration

Written by: Sherry Mao

Introduction

In an increasingly complex credit environment, the Personal Property Securities Register (PPSR) has become a critical risk-management and enforcement tool for the lenders. This article considers the PPSR from a lender’s perspective, highlighting why proper registration is critical to place the lenders into a better position in the event repayment obligations aren’t met.

What is Personal Property

‘Personal Property’ means all property other than land, buildings, fixtures to land and most government issued licences or rights, which can be grouped into the following four categories:

• Tangible Property: motor vehicles, boats, machinery, equipment and goods.
• Intangible Property: intellectual property (including copyright, patents and designs).
• Financial Property: cash, shares, stocks, private commercial licences and other investment instruments.
• General Property: all present and after acquired property (All-PAAP) classes.

Common types of registrations (All-PAAP & PMSI)

Lenders often use:

• All Present and After-Acquired Property (All-PAAP): Covers all current and future personal property of the debtor, with flexibility to carve out specific assets.
• Purchase Money Security Interest (PMSI): Covers a specific asset where loan funds are used to acquire it, granting “super priority” over prior registrations if perfected correctly.

When must lenders register their security interest?

For security interests granted by corporate entities (Section 588FL of the Corporations Act 2001):

• Register within 20 business days after the security agreement is signed, or
• More than 6 months before the grantor enters insolvency proceedings (e.g., administration or liquidation).

Failure risks the interest vesting in the grantor upon insolvency, rendering it ineffective against the liquidator/administrator (and potentially for up to 6 months after late registration).

The PMSI registration is subject to a stricter timing rule. The timeframe for the registration of such interest required under Section 62 of the Personal Property Securities Act 2009 (Cth) (PPSA) is as follows:

PMSI Property Type	Timeframe for PMSI Registration
Specific asset is part of the grantor’s inventory and is goods*	Before the grantor obtains possession of the asset
Specific asset is part of the grantor’s inventory but not goods*	Before the security interest attaches to the asset
Specific asset is not part of the grantor’s inventory butis goods*	Within 15 business days of the grantor obtaining possession of the asset
Specific asset is not part of the grantor’s inventory and not goods*	Within 15 business days of the security interest attaching to the asset
*“Goods” is defined as tangible personal property under the PPSA.

Generally speaking, the PMSI registration will take first priority even if there are other prior registrations with respect to that particular asset. However if the registration is not made within the required timeframe, it will lose its ‘super priority’.

How should the registration be recorded – ACN or ABN?

The grantor’s details must be recorded in accordance with Schedule 1 of the Personal Property Securities Regulations 2010 which is summarised as follows:

1. Individual – full names and the date of birth as recorded on the identity documents with the following priority order:

1. Information you have about the individual because of the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
2. Current Australian driver’s licence
3. Australian proof of age card
4. Australian passport
5. Australian visa
6. Passport from the country they usually live in
7. Birth certificate.

2. Company – ACN. Where ACN is available, it is mandatory as the registration of the company’s ABN is an unperfected registration (in the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21).

3. Trust with ABN – ABN (in the matter of 0 Love 0 Pty Ltd v Registrar of Personal Property Securities [2021] AATA 397).

4. Trust without ABN – name of the trust. If ABN is subsequently granted, the registration must be amended within 5 business days of being made aware of the defective registration (in the matter of Psyche Holdings Pty Limited [2018] NSWSC 1254).

Key takeaways for the lenders

Correct and timely PPSR registration can determine full debt recovery versus ranking behind other creditors or losing security entirely. Lenders therefore need to maintain accurate records of registrations, amendments, releases, and debtor notices/requests.

Please feel free to reach out to JHK Legal for further information or guidance around PPSR by contact us on 02 8239 9600 or [email protected].