Removing a PPSR Registration held by a Deregistered Company
Written by Grace MacGillivray
The Personal Property Securities Register (PPSR) manages security interests over personal property. Before its introduction in January 2012, security interests were registered with various state and federal agencies. Companies registered with ASIC had their security interests automatically migrated to the PPSR upon its establishment.
Recently, Wisewould Mahony advised a client on removing a security interest registered over its assets in 2001. The issue was that the company holding the security interest was deregistered before the PPSR was established, but the registration nevertheless remained and was migrated to the PPSR in 2012.
When a company is deregistered, it ceases to exist as a legal entity, which complicates the process of dealing with any security interests which remain registered in favour of that company notwithstanding its deregistration.
We advised and assisted our client on the process for having the PPSR registration removed, which was as follows:
- Obtain Registration Details:
We obtained the details of the PPSR registration, including the registration number and details of the deregistered secured party. This information can be accessed via a PPSR search using the grantor’s details (the grantor being our client), the company which gave (or ‘granted’) the security interest in favour of the now deregistered company. By obtaining an ASIC extract of the details of the secured party, we were able to determine when the secured party was deregistered and details of its directors upon the date of deregistration.
- Contact the Secured Party:
Typically, the next step is to contact the secured party which holds the authority with a request for it to discharge the PPSR registration. However, in this case the secured party could not be contacted as it had been deregistered. As such, the request to discharge the PPSR registration must be served on the Registrar of the PPSR as well as ASIC’s Property Law Group.
- Submit an Amendment Demand:
In order to request that a secured party discharge a security interest registered on the PPSR, the grantor is required to serve an “Amendment Demand’ on the secured party.
In this instance, we submitted an Amendment Demand to secured party by emailing same to the Registrar of the PPSR including with it the PPSR search and a historical company search of the secured party. A copy was also emailed to ASIC’s Property Law Group.
- Wait for response:
The time period within which a secured party must discharge a security interest after receipt of a valid Amendment Demand is 5 business days.
If the PPSR registration is not discharged by the secured party within this period, the grantor can then apply to either the Registrar of Personal Property Securities (Registrar), or a court, to have the PPSR registration removed.
Given that in this instance the secured party has been deregistered for some 19 years, and one of the directors of the secured party as at the date of registration of the security interest was deceased and the other elderly and unlikely to know anything about the PPSR registration, the likely prospect when serving the Amendment Demand on the Registrar was that there would be no response to the Amendment Demand from the secured party and, therefore, our client would need to apply to the Registrar or a court to have the registered security interest removed.
As this removal was not urgent in this instance, our client determined that applying to the Registrar for removal of the registered security interest was the preferable and more cost-effective approach.
- Submit an Amendment Statement:
The process to request that the Registrar remove the security interest from the PPSR is to submit an ‘Amendment Statement’ to the Registrar along with the required documents, being the amendment demand sent to the secured party, any responses from the secured party, evidence showing an interest in the property (such as documents that prove ownership), and any evidence which supports the demand.
If the Registrar is satisfied that the registered security interest is no longer valid, it can remove or amend the registration. It can take weeks or months for the Registrar to make a formal decision.
Removing a PPSR registration held by a deregistered company requires a clear understanding of the required PPSR process. By following these steps, outdated or incorrect registrations can be effectively addressed, updated or removed, thereby preventing future complications with incorrect or outdated security interests remaining registered over your business on the PPSR.