Registering a Financing Statement

Perfection of a security interest by registration occurs by the filing of an electronic financing statement on the PPSR.

A secured party must have reasonable grounds for making an application to register a financing statement (s 151). Because financing statements may be lodged in anticipation of a security interest, if a security interest does not eventuate, the secured party has five days to remove the registration (s 151(3). A secured party that breaches these requirements will be subject to civil penalty provisions (s 151(2)).

A single registration may also perfect multiple security interests (s 21(4). An appropriately drafted financing statement may also cover multiple supplies of goods – especially in the PMSI context.

Data to be included in a financing statement

Great care is needed when entering data into a financing statement. A financing statement which contains a seriously misleading defect will be ineffective (s 164(1)). For this purpose, it is not necessary to establish that any particular person was mislead (s 165(2)).

The table in section 153 sets out the data which must be included in a financing statement to be registered on the PPSR. A financing statement with respect to personal property prescribed by the regulations (reg 5.3(1)) must contain particular data (s 154). The following property is currently prescribed:

  • a motor vehicle that has been impounded, immobilised or forfeited, or is subject to an impoundment, immobilisation or forfeiture application, under a law that provides for impoundment, immobilisation or forfeiture of a motor vehicle because it is being used, or has been used, in the commission of certain offences;
  • personal property that is subject to a notice or an order, or is confiscated or forfeited, under a provision of a proceeds of crime law;
  • personal property that is subject to an order of a court or tribunal (however described) that:
    • prevents or restricts a person dealing with the property; or
    • enforces another court order (however described); or
    • orders the sale or other disposal of all or part of the property;
    • personal property that:
      • is not mentioned in paragraph (a), (b) or (c); and
      • immediately before the registration commencement time, could have been registered on a transitional register maintained under a law of the Commonwealth, a State or a Territory

In addition, schedule 1 of the Personal Property Securities Regulations 2010 prescribes particular information which must be included in the registration.

In summary, a financing statement must contain details of:

  • the secured party;
  • the grantor;
  • an address for the giving of notices to the secured party;
  • the collateral and any proceeds;
  • the end time of the registration;
  • any subordination of the security interest;
  • whether the security interest is a PMSI; and
  • any matters prescribed by the regulations.

Items 1 & 2: Grantor and Secured Party Details

Details required where the secured party or grantor is an individual

An ‘individual’ includes a sole trader who has an ABN for the enterprise to which the security interest relates. It does not include a partner or trustee with an ABN for the enterprise to which the security interest attaches.

The prescribed details relating to individuals are located in the table in regulation 1.2. These details must be sourced from the appropriate identification. The details recorded in the lowest item number applicable to an individual must be included.

The prescribed details are:

  • the individual’s surname;
  • given names; and
  • the grantor’s date of birth.

The hierarchy of source documentation is set out below:

Item Number Individual Source
1 Individual whose details are recorded in a transitional register for a migrated security interest. Transitional register
2 Individual grantor who is known to the secured party because of the operation of the AML-CTF Act Current data known by the secured party because of the operation of the AML-CTF Act
3 Individual who holds a current driver’s licence Current driver’s licence issued by a State or Territory licensing authority to the individual
4 Individual who holds a current proof of identity or current proof of age card Current proof of identity or current proof of age card issued by a State of Territory body to the individual
5 Individual who holds a current Australian passport Current Australian passport issued to the individual
6 Individual who holds a current visa, issued by the Australian Government Current Australian visa issued for the individual
7 Individual who holds a current passport other than an Australian passport Current passport issued by the jurisdiction in which the individual ordinarily resides
8 Any other individual Birth certificate issued for the individual.

Details required where the secured party or grantor is a body corporate

A body corporate includes a trustee with an ARSN. Again, the prescribed details, are the details recorded in the lowest numerical item applicable to the body corporate. The table at regulation 1.3 is set out as follows:

Item Number

Body Corporate

Details

Source

1 Body corporate for which details have been included on the transitional register for a migrated security interest Body corporate number or name of body corporate, as recorded on the transitional register Transitional register
2 Body corporate that is the responsible entity of a registered scheme, if the scheme has an ARSN Registered scheme’s ARSN National Names Index
3 Body corporate that has an ACN ACN National Names Index
4 Body corporate that has an ARBN ARBN National Names Index
5 Any other body corporate Name of Body corporate, as provided for in body corporate’s constitution or equivalent document Body corporate’s constitution or equivalent document

Details required where secured party or grantor is a partner of a partnership

Item Number

Partner

Details

Source

1 Partner of a partnership for which details of the partnership have been included on the transitional register, for a migrated security interest ABN, name of partner or name that identifies partnership, as recorded on the transitional register Transitional register
2 Partner of a partnership that holds or has an interest in collateral in the course of for for an enterprise that has been allocated an ABN ABN Australian Business Register
3 Partner in any other Partnership Details if lowest Item in Reg 1.2  (individual)  

Details required where the secured party or grantor is a trustee

The definition of ‘trustee’ includes a body corporate that is a trustee of a trust that has an ABN and does not have an ARSN.

For a trustee that is an individual, regulation 1.2 will apply.

Trustee details means either:

  • The ABN allocated to the enterprise carried on by the trustee; or
  • The ACN or ARBN allocated to the trustee; or
  • The name of the trust or trustee.

Item Number

Trustee

Details

Source

1 Trustee of a trust for which details of the trust have been included on the transitional register, for a migrated security interest Trustee details, as recorded on the transitional register Transitional register
2 Trustee of a trust that holds or has an interest in collateral in the course of, or for, an enterprise that has been allocated an ABN ABN Australian Business Register
3 Trustee of any other trust Details prescribed for individuals in reg 1.2  

Details required where secured party or grantor is a body politic

There are no special inclusions to the definition of Body Politic.

Item Number

Body Politic

Details

Source

1 Body Politic for which details have been included on the transitional register, for a migrated security interest Body politic details as recorded on the transitional register Transitional register
2 Body Politic that holds or has an interest in collateral in the course of or for an enterprise that has been allocated an ABN ABN Australian Business Register
3 Body politic that has an interest in collateral other than in the course of or for an enterprise that has been allocated an ABN Name of body politic in accordance with constitution of body politic Constitution of body politic.

 Item 3 – Giving of Notices

Item Data about: Details of data
3 Giving of notices The following:(a) an address (including an email address or fax number) for the giving of notices to the secured party (or secured parties) relating to the registration;(b) details of any identifier provided for the giving of notices to the secured party (or secured parties).Note: For identifiers see section 289.

 Under item 3, the Secured Party must provide:

  • An address (including an email address or fax number) for the giving of notices to the secured party relating to the registration; and
  • Details of any identifier provided for the giving of notices to the secured party. Section 289

Item 4 – Collateral and Proceeds

4 The collateral and proceeds A collateral description in accordance with all of the following rules:(a) the collateral must be described as one of the following:

(i) consumer property;

(ii) commercial property;

(b) the collateral may or must be described by serial number, if allowed or required by the regulations;

(c) the collateral must belong to a single class of collateral prescribed by the regulations;

(d) any description of proceeds must comply with the regulations.

Note: 2 or more types of collateral that belong to different classes prescribed by the regulations must be described in separate registrations. However, 2 or more registrations can be effected through a single application.

Collateral must be sufficiently described in the financing statement. The collateral description must comply with all of the following rules.

The collateral must be described as one of the following:

  • consumer property;
  • commercial property;

Serial numbered Property

Regulation 2.2(1) provides that collateral described as Consumer Property must be described by serial number where it is:

  • Aircraft;
  • Intangible property that is a design, patent, plant breeder’s right or trademark or licence there over;
  • Motor vehicles (reg 1.7); and
  • Watercraft.

The relevant serial number used to describe Consumer Property that is a motor vehicle is:

  • firstly the Vehicle Identification number; then
  • the chassis number;
  • then manufacturer’s number

Generally speaking, Commercial Property may be described by serial number for:

  • Motor vehicles;
  • Watercraft;
  • Intangible property rights.

Commercial property that is an aircraft must be further described as an aircraft engine, airframe, helicopter or small aircraft, which must be described by serial number.

In commercial dealings, it may not be practical to separately register each property according to serial number. Searches should therefore be performed by serial number and name of commercial grantor.

 Item 4(c) Classes of Collateral

A financing statement must include a description of collateral by reference to a single class as prescribed by the regulations. The following are classes of collateral:

  • agriculture;
  • aircraft;
  • all present and after-acquired property;
  • all present and after-acquired property except;
  • financial property;
    • chattel paper;
    • currency
    • a document of title;
    • an investment instrument;
    • a negotiable instrument
  • intangible property;
    • means personal property (including a licence) that is not any of the following:
      • financial property;
      • goods;
      • an intermediated security.
  • motor vehicle;
  • other goods;
    • personal property that is goods, other than agriculture, aircraft, motor vehicles and watercraft.
  • watercraft.

 Item 4 (d) description of proceeds

 Under Sch 1, reg 2.4, any description of proceeds must describe the proceeds:

  • as all present and after acquired property;
  • for a particular item of personal property — in a way that identifies the item, including identifying a class to which the item belongs;
  • for a class of personal property — in a way that identifies the class, including identifying the class by identifying a larger class of personal property that wholly includes the class

 Item 5 – End time for registration

Item Data about: Details of data
5 The end time for registration For all the collateral described in the statement, the following data:(a) for collateral other than consumer property or property described by a serial number:

(i) no stated end time; or

(ii) an end time for the registration no later than the time (the default time) that is the end of the day 25 years after the registration time; or

(iii) if the registration is amended to include or change (but not omit) an end time—an amended end time for the registration no later than the time (the default time) that is the end of the day 25 years after the amendment time for that amendment;

(b) for consumer property, or property described by a serial number:

(i) an end time for the registration no later than the time (the default time) that is the end of the day 7 years after the registration time; or

(ii) if the registration is amended to change the end time—an amended end time for the registration no later than the time (the default time) that is the end of the day 7 years after the amendment time for that amendment.

Item 6 – subordination

Item Data about: Details of data
6 Subordination An indication of whether the security interest is (or is to be) subordinated to any other security interest. However, this indication need not be included.

See section 61.

Item 7 – security interest

Item Data about: Details of data
     
7 Security interest An indication of whether the security interest is, or is to be, a purchase money security interest (to any extent) if the security interest is in respect of a class of collateral prescribed by the regulations for the purposes of this item.

An indication of whether the security interest is or is to be a purchase money security interest (to any extent).

 Item 8 – any matter prescribed by the regulations

Item Data about: Details of data
     
8 Any matter prescribed by the regulations Details of the matter prescribed by the regulations, whether or not the matter also comes under any of the other items in this table.

 For collateral that is commercial property, a financing statement must contain details of:

  • whether or not the collateral may include inventory;
  • whether collateral may include ‘current assets’ as defined in subsection 340(5) that are subject to control.

A financing statement must also indicate whether the security interest is a transitional security interest or a migrated security interest.

If collateral is subject to a migrated security interest, the registration must also include details of:

  • The name of the transitional register in which the data about the transitional security interest was held; and
  • When the migrated data was registered in the transitional register – the original registration time.

Finally, if an ABN, ACN, ARSN or ARBN is entered in a financing statement and a verification of these numbers is undertaken with the Australian Business Register or the National Names Index – the entity name or other data attached to those identifier numbers obtained from the Australian Business Register or the National Names Index must be included.

Comments are closed.