On 20 May 2017 the definition of a PPS Lease under the Personal Property Securities Act 2009 (Cth) (“PPSA”) was amended. Leases and bailments entered into on or after 20 May 2017 will be effected.
There are two substantive changes as a result of the new definition:
The minimum duration of a PPS Lease has been extended from more than one year to more than two years.
An indefinite term lease will not be deemed to be a PPS Lease unless and until it runs for a period of more than two years.
The changes mean that if you lease or hire goods for a period of two years or less (including applicable options to renew), you will no longer need to register your interest in the leased or hired goods on the Personal Property Securities Register (“PPSR”). However, if the lease or hire agreement exceeds the agreed term, and continues for a period of over two years, it will become a PPS Lease when its term extends beyond two years and should be registered on the PPSR promptly at that time.
Whilst the amendments are proposed to significantly reduce the regulatory impact of the PPSA on small to medium enterprises, businesses will still need to implement stringent policies to ensure that all leasing arrangements are monitored, diarised and registered on the PPSR at the time that the lease duration exceeds two years.
It is also important to remember that there may be situations where a lease might still meet the general definition of a security interest under the PPSA (even if it does not fall within the definition of a PPS Lease) and should be registered on the PPSR to protect your business’ interests.
If you have any queries relating to the PPSA and PPSR, please do not hesitate to contact Katie Pote or one of our team.