Crops, stock and charges – the new regime for
granting security over your assets
The Personal Properties Securities Act 2009 (Cth) (PPSA) commenced in Australia on 30 January 2012
and introduced a new and simplified process to govern security over personal property. The PPSA
applies to all tangible and intangible property including security interests in crops and livestock and the
only exclusions are land, water rights and certain rights or entitlements created by statute.
The PPSA not only consolidates the existing laws but opens up further assets over which financiers may
seek to take security and which may not have been expressly dealt with in the pre-PPSA environment.
The new regime also requires certain interests in assets, which may be dealt with as part of normal
business operations, to be registered.
There are particular provisions dealing with security over agricultural interests and, in certain
circumstances, the PPSA grants a party providing value for the purpose of growing, feeding or developing
crops or livestock a form of “super-priority” in relation to competing secured creditors provided that the
criteria set out in the legislation are met. For example, a security interest in a crop can exist while the
crop is growing, after it is harvested and transported offsite and extends to the proceeds of the crop if
the agreement governing the security interest is drafted in such a way as to allow proceeds to be
captured.
The PPSA is intended 'to remove the uncertainty arising from the vast amount of Commonwealth, State
and Territory legislation and the uneasy interaction of statutes, the common law and equitable legal
principles‟.
There are three key messages under the PPSA:
1
It represents a significant overhaul of the laws in relation to security taken over personal
property.
2
There are numerous measures that businesses should be taking following implementation of the
PPSA.
3
It will considerably simplify granting and taking security over personal property but requires
registration of a wider range of interests than was required previously.
It is hoped that the implementation of the regime will make financing in the agribusiness sector a much
simpler process with crop liens, stock liens, the old company charges, intellectual property and specific
assert securities all being recorded on one register and easily accessible for businesses and financiers.
What to do now?

Review and update pro forma contracts.

Ensure arrangements are in writing.

Establish a registration system.

Identify what security interests you may hold over others and how those are currently
protected.

Review contracts to identify clauses which may require PPSA amendments or which may
require registration.
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Identify where assets owned by you are not in your possession at all times.
Some might suggest the maxim „short term pain for long term gain‟ applies in this instance. There are
new documents to become accustomed to, a new registry to deal with and new rules governing priority
and enforcement to learn. However, as of 30 January 2012, the reality is…One Act, One Document, One
Register.
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