Explanatory Memorandum
(Circulated by the authority of the Attorney-General, the Honourable Robert McClelland MP)PERSONAL PROPERTY SECURITIES (CORPORATIONS AND OTHER AMENDMENTS) BILL 2011
OUTLINE
The Personal Property Securities (Corporations and Other Amendments) Bill 2011 (the Bill) is the final set of amendments to the Personal Property Securities Act 2009 (PPS Act) and consequential amendments to other Commonwealth legislation prior to the Personal Property Securities (PPS) regime coming into effect this year.
The PPS legislation will rationalise the current Commonwealth, state and territory laws on securities in personal property. It will create one single national set of rules and a single national online register. There will be one comprehensive law with clear rules governing the validity, priorities, enforcement and extinguishment of security interests in all personal property.
The PPS (Corporations and Other Amendments) Act 2010 (2010 PPS Act) contained a set of consequential amendments arising from the passage of the PPS Act. This Bill will make a number of amendments which have been raised by stakeholders and practitioners following an inquiry by the Senate Standing Committees on Legal and Constitutional Affairs into the 2010 PPS Act.
The Bill contains two schedules:
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- Schedule 1: Corporations Act 2001 ; and
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- Schedule 2: Personal Property Securities Act 2009 .
Amendments to the Corporations Act
The PPS Act made a number of amendments in order to align the Corporations Act with the functional approach in the PPS Act. These amendments are intended in no way to interfere with existing rights of parties under the Corporations Act . They are intended to incorporate the new PPS Act concepts but also retain existing concepts under the Corporations Act, to the extent that they apply to property or transactions not covered by the PPS Act.
The Bill will therefore make it absolutely clear that the intention of the 2010 PPS Act is not to interfere with existing rights of parties under the Corporations Act. The Bill will do this in particular by confirming that:
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- the 2010 PPS Act will not affect a secured party's capacity to appoint or veto the appointment of a company administrator under a transitional security agreement
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- the liability of receivers and the ability of administrators to avoid liability for transactions entered into by the company before their appointment will be retained
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- the existing ability of the holder of a pledge or lien to enforce is subject to the pledge or lien not being subordinate to another security interest.
Amendments to the PPS Act
Amendments to the PPS Act will provide important practical measures to ensure that the regime is appropriate for users.
The Bill will make a number of amendments to:
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- provide exemptions to the rules on taking personal property free of security interests for temporarily perfected transitional security interests and transitional security interests which were not previously registered by serial number
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- ensure that the definition of security interest is consistent with the New Zealand legislation and remove any potential for confusion
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- clarify that CHESS securities are intermediated securities and the means by which CHESS securities can be subject to control
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- ensure access to third party data through the Register as an important consumer protection measure
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- impose conditions on accessing and using data on the Register to ensure that parties cannot sell this data and undermine the Commonwealth's ability to recover costs associated with the implementation and ongoing administration of the PPS system
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- enable the Registrar to investigate breaches of the rules authorising searches of the Register and registration of security interests on the Register
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- clarify the provisions on security interests in authorised deposit-taking institutions and the provisions on control of inventory and accounts.
Amendments proposed in the Bill would also provide an additional method for states that have not yet referred power to the Commonwealth with respect to PPS to be able to 'adopt' the relevant version of the PPS Act (including this Bill) and refer power to the Commonwealth to make subsequent amendments to the PPS Act. Existing referrals of power will not be affected by the amendments.
FINANCIAL IMPACT STATEMENT
There is no direct financial impact on Government revenue from this Bill.
NOTES ON CLAUSES
Clause 1: Short title
1. Clause 1 is a formal provision specifying the short title of the Bill. It provides that when the Bill is enacted, it is to be cited as the Personal Property Securities (Corporations and Other Amendments) Act 2011 .
Clause 2: Commencement
2. This clause provides for the commencement of the various proposed amendments.
Clause 3: Schedules
3. This is a formal clause that enables Schedules to amend an Act. It provides that each Act that is specified in the Schedule is amended or repealed as set out in the applicable items in the Schedule, and that any other item in a Schedule has effect according to its terms. The Bill contains two Schedules.