Today BRR speaks with Hal Bolitho, who’s a Partner in the Banking and Finance team at Mallesons Stephen Jaques in Melbourne.  Welcome to BRR Hal.

Thanks very much David.

Hal the Government has just introduced an amendment to the Personal Property Securities Act.

Yes.  Some of your listeners may be familiar with the Act but what the Act is doing is introducing into Australia a new system for registering securities so mortgages, charges, other secured interests in property.  It’s based on a similar systems in New Zealand and Canada with which in turn are based on a system in the United States, and it’s a pretty radical overhaul of the way we treat security interests in Australia.

So what are I guess the major changes to the current law and what are the implications for Australian businesses?

Well at the moment we have about 70 different State and Commonwealth acts that deal with secured interests and around 30 different registers of security interests.  Some of them like the ASIC Charge Register or the Register of Encumbered Vehicles for Car Mortgages, these are, you know, pretty common, pretty well understood.  Others like the Australian Register of Ships or State Bills of Sale Register, they’re a bit more specialised and the PPSA is bringing these all into one single uniform system and one uniform set of rules for all personal property.  And when I say personal property I mean pretty much everything you can think of except land, it will cover cars, bank accounts, rights under contract, pretty much everything.

And so in terms of the amendment today, what does that do?

So the Act was hardwired so that the new Register had to come into effect no later than 1 February 2012.  The Government had the power to bring that start date forward if they wanted to but they had to do it by 1 February.  The amendment that they’ve introduced today now gives the Attorney-General the power to delay the start of that to a later date, so it’s pretty much a prudent step by the Government to give themselves some more flexibility so that they can delay the introduction if they feel they have too.

Right okay.  So with that in mind when will the new Register come into effect?

Well we don’t really know yet.  They’d clearly like to stick to the original timetable if they can.  They had proposed an earlier start date of October this year but recently announced that they wouldn’t be making that start date because they needed to do some more testing on the Register.  It’s a bit hard to pin down an exact start date but I think whether they take advantage of this flexibility or not the Register will definitely be in effect early next year.

So just finally, what can businesses do now to prepare themselves?

I think businesses really need to accept that this is happening and get their minds around what the Act is going to do.  In particular it changes the way we deal with a lot of arrangements that we don’t currently think of as security.  So long term leases, long term bailments, sales of receivables, these are currently private unregistered arrangements and nobody worries too much about them.  These will all become public registrable arrangements with serious consequences if you fail to register, and I think the business community really needs to get its mind around how that’s going to change the way we do things.

Absolutely.  Well some great insights there, and thanks again for your time this afternoon Hal.

No worries.  Thank you.

That was Hal Bolitho, Partner in the Banking and Finance team with Mallesons Stephen Jaques in Melbourne.  Listeners if you have any questions for Hal please send a message using the panel that appears on your screen, or if you don’t have that please email through to brr@brr.com.au and we’ll forward your query.