Protecting your Assets – the PPSR is (most likely) for you!

Despite the Personal Property Securities Register (PPSR) being in operation since 30 January 2012, many businesses continue to be ignorant of the PPSR with instances of parties not understanding the nature of their agreement with customers, failing to register or registering incorrectly.

The cost to register a financing statement is as little as $6.80 but making an error in your risk management can result in losing the asset (collateral). This is commonly seen in the vesting of a security interest in the customer (grantor) upon insolvency. This was the case in the recent matter of General Electric International Inc. where security interests in four turbine generators worth millions of dollars were ruled to have vested in its insolvent customer.

So how can you avoid this?

To check if you’re protected and avoid making common mistakes, you should consider the following questions and seek professional advice:

  • What are the terms of present agreements with your customers?
  • Do the agreements grant a security interest?
  • Are there existing security interests granted by the customer?
  • Do you have a credit agreement or terms and conditions providing consent from the customer to granting a security interest?
  • Have you made a registration on the PPSR within the required timeframe?
  • Is the registration free of defects?

What is the arrangement and is it a security interest?

A security interest is an interest in an asset (personal property) provided for by a transaction such as a sale or lease that, in substance secures payment or performance of an obligation.

The list of potential security interests is wide ranging however there are some exclusions such as land, fixtures, liens and government issued licences / rights such as water rights. The following list is a small example, therefore your first question should be to consider each of the trading arrangements that make up your business.

Examples include:

  • A lease including leases or bailment of goods for a period of greater than a year or shorter periods which, when combined are over a year
  • Sale agreements such as selling your products subject to retention of title
  • Consignments
  • Providing finance or credit and taking security such as:
    • a chattel mortgage
    • a fixed charge (non-circulating security interest)
    • a floating charge (circulating security interest)
  • Growing crops on leased land under a share farming arrangement
  • Provide finance for the purchase of specific assets such as plant, equipment, motor vehicles or livestock
  • Selling fertiliser, seed, grain or other products to fund the growth of crops or livestock

What documentation should I have?

Firstly, before providing finance to customers, ensure your due diligence includes conducting a PPSR search on all three identifiers, ABN (including any Trust ABN), ACN and name.

Secondly, a security agreement, terms and conditions or contract for sale/supply/hire is required which provides for the customer’s consent to the granting of a security interest.

Thirdly, a financing statement should be registered on the PPSR to perfect the security interest granted by the customer. Registration on the PPSR is the most common way to perfect a security interest.

Registering on the PPSR

There are a number of options when registering your security interest on the PPSR. Some common questions to consider include:

  • Was a specific asset financed, leased or do you have retention of title terms?
  • Are you looking to provide finance and seeking to register a general security interest over specific property or all the property of the customer?
  • Consider what happens after the sale of the goods and whether a security interest should be claimed in the proceeds? Proceeds can include:
    • a new product produced by the customer using the product you supplied
    • a right to an insurance payment or other payment as compensation for loss of the product you supplied
    • the products of livestock being meat and wool but not the unborn young/offspring of the livestock
    • the harvested produce of crops provided the produce is identified or traceable
  • Avoid defects in your registration by registering by the correct identifier such as ACN, ABN or name depending on the type of entity


Registering on the PPSR can be completed before supplying the property to the customer. To avoid the risk of the collateral vesting in the customer upon insolvency, there are some important timeframes to meet:

  • General Security Interest – register within 20 business days after the security agreement was entered or more than 6 months before an insolvency event
  • Retention of Title or consignment (now called a Purchase Money Security Interest). To ensure the PMSI has priority over other security interests:
    • Inventory – MUST register before the customer obtains possession of the asset
    • Other (non-inventory) – register within 15 business days of the customer obtaining possession of the asset


Andrew Bowcher
Partner - Wagga Wagga
Jonathon Colbran
Partner - Canberra & Melbourne
Neil Cribb
Partner - Perth
Peter Marsden
Senior Consultant - Sydney