SA Mines and Energy Journal : February-March 2011
20 FEBRUARY/MARCH 2011 SA MINES & ENERGY JOURNAL BUSINESS Personal property securities legislation By now most readers would have heard about the new Personal Property Securities Act, 2009 sometimes referred to as 'the PPSA' or simply as 'PPS'. Not many know enough to say with confidence how their business will be affected. This is an introductory article which explains some critical concepts of the new legislation. A column dedicated to dealing with specific issues will follow in future editions. The new legislation was due to commence in May but has now been postponed to October. Businesses can benefit from the delay with more time now to understand what it's all about and make appropriate plans. The legislation impacts on security interests in personal property. We can think of a security interest using a very simple example: if a resources company purchases a new truck on finance and the finance company takes a security interest in the truck then, if the resource company defaults on its repayments, the finance company is able to repossess the truck and recover the loan amount. The finance company is able to recover because they have 'secured' their interest in the vehicle. Clearly, in the business world things get much more complicated than this and the new legislation is indeed very complex. In the technical language of the PPSA, a security interest means any interest in relation to personal property provided for by a transaction that, in substance, secures payment or performance of an obligation. There are other transactions too which are deemed to create a security interest whether or not they secure payment or performance of an obligation. Most equipment leases and general retention of title arrangements in supply contracts will be considered security interests. The new legislation only applies to personal property as defined, so it is important to understand that personal property is any form of property other than land and fixtures, water rights, or a title or a right (title or authority) that is declared not to be personal property for purposes of the PPSA. Of great interest for resource companies is the third category dealing with rights, titles or authorities which may be declared not to be personal property under the PPSA. Here we are talking about mining or petroleum leases for example. These are discussed in detail in our first PPS column but for present purposes we believe most onshore titles will not be personal property. Apart from the items listed above, everything else has the potential to be covered by the new legislation incorporating both intangible and tangible personal property, including minerals and hydrocarbons once extracted. If your company is granted security interests in personal property it is important to ensure the granting of the security interest is done in accordance with the new legislation. For resources companies the greatest impact is likely to relate to joint venture cross charges, equipment leasing or hiring and supply contracts that include retention of title provisions. The first step to understanding how your business will be affected is to determine whether your company grants or takes any security interests in personal property. The next step is to determine what exactly you need to do to protect your interests. BY LEANNE MCCLURG, PIPER ALDERMAN Sundowner Cabin and Tourist Park newest and most modern accommodation in Whyalla Conceived and designed to meet the accommodation needs of your work force Lincoln Highway, Whyalla Norrie, South Australia 5608 Phone (08) 8645 1535 Fax (08) 8645 9324 firstname.lastname@example.org www.sundownercabinpark.com.au Directors Robert Gwynne 0417 083 403 Stephen Edwards 0418 827 455 55 Deluxe Two Bedroom Self Contained Cabins featuring • King Size Beds -- King or Single Sleep 4 in comfort • Reverse Cycle Air-conditioning & Ceiling Fans • Fully equipped kitchen with full size fridge and stove • Modern spacious bathroom • Ample lounge and dining area • LCD Wall Mounted TV • WIFI Internet Access • Veranda & Outdoor Seating Guest Services include • 24 Hour Reception • Guest Laundry and Convenience Store • Ample parking for large vehicles • Quiet and secure location • 2km to Whyalla Airport • Medium to Long Term Bookings You have the contract and the personnel WE HAVE THE ACCOMMODATION Contact Managers Revel & Fiona Hyde to arrange inspection or quotation THE SINGAPORE AIRLINES A330 Now you can travel in even greater comfort with our new inclined-flat* leather seats in Business Class on the Singapore Airlines A330. Singapore Airlines operates daily non-stop services between Adelaide and Singapore. *8 degree incline.
December 2010 - January 2011