Hot off the press - Change proposed to definition of a Personal Property Securities Lease
A Bill is currently before the House Representatives which proposes an amendment to the Personal Property Securities Act 2009 (PPSA). The Personal Property Securities Amendment (PPS Leases) Bill 2017 (the Bill), as its name suggests, seeks to change what will fall within the definition of a Personal Property Securities (PPS) Lease.
The proposed amendment
The proposed amendment will change the qualifying minimum duration of what will be a PPS Lease. Currently, section 13 of the PPSA provides that leases (and bailments), which do not secure payment or performance of an obligation, but potentially could run for more than a year or are for an indefinite term, are deemed to be a security interest known as a PPS Lease.
It is now proposed that:
- the one year reference when appearing in the definition be changed to two years; and,
- the reference to an indefinite term be removed. The intention is that indefinite term leases will no longer be deemed to be PPS Leases unless and until they run for a period of more than two years.
Why the proposed change?
The purpose of the proposed changes is to reduce the number of leases and bailments that would fall within the PPSA. This would, in turn, reduce the burden on what is essentially the majority of small to medium sized businesses. Their burden lies in having to register on the PPS Register to protect security interests arising from shorter term leases and bailments. What will still be impacted however, is longer term, higher value leases and bailments.
Where to from here?
The Bill was introduced and read before the House of Representatives on 1 March, 2017. We must now wait to see if any amendments to the Bill will be made and the outcome of Bill after it reaches the Senate.
Our Plain English Guide to the PPSA and PPSR provides a succinct overview of the legislation and its implications.
If you have any questions regarding the proposed amendment, please contact our PPSA experts in Parramatta, Norwest and Penrith: