Registering Security Interests & Searching the PPSR

From 30 January 2012, the Personal Properties Securities Register (PPSR) replaced a number of Commonwealth, state and territory government registers for security interests in personal property and became the single national source of registered security interests in personal property.

Security interests which were previously recorded on the prior Commonwealth, state and territory registers were transferred to the PPSR for the commencement of the register on 30 January 2012.

There were a number of issues with the migration of data from the historical registers to the PPSR. One such issue was with the migration of ‘charges’ from the Australian Securities Investment Commission (ASIC) register. Initially it was expected that all ‘charges’ would be registered against the Australian Company Number (ACN) of the relevant grantor (or chargors as they were described on the ASIC register). However a significant proportion of the migrated ASIC registrations where made against the Australian Business Number (ABN) of the relevant grantors, rather than the ACN. The effect of this is that there is no consistency as to how security interests have been registered on the PPSR, with some registered against the ACN of grantors and others registered against a grantor’s ABN.

Therefore when conducting due diligence on another entity, such as a vendor in a purchase of business transaction, it is imperative that PPSR searches be conducted against the name, ABN and ACN of the relevant entity to ensure that all registered security interests are identified and investigated. A failure to do so can result in registered security interests being missed during the due diligence stage of a transaction which, for example in a sale of business transaction, may result in a purchaser acquiring assets for which they are unable to hold clear and unencumbered title.

Additionally when registering security interests on the PPSR where the grantor of the security interest is the trustee of a trust, security interests should be registered against both the name of the individual trustee or ACN of the corporate trustee as well as the ABN of the trust. Therefore when entering into a commercial transaction with the trustee of a trust it is important to search the name, ACN and ABN of the corporate trustee as well as the name and ABN of the trust. This will ensure comprehensive due diligence is completed and the transacting parties will be on notice of any registered security interests which may need to be investigated and released as part of the transaction.

For further information, please contact our Commercial Team