Asset protection and the PPSA

PPSA and asset protection

It is often overlooked that the Personal Properties and Securities Act (PPSA) applies to internal business structures. In fact, this new legislation may pose a serious risk to businesses which rely on asset protection structures. These structures are no longer sufficient protection and it is imperative that asset owners take the necessary steps to register all security interests on the Personal Properties and Security Register (PPSR).


What is the PPSR?


The PPSR has replaced a number of registers including the ASIC Charges Register. The PPSR allows for the registration of a security interest in personal property which can be enforced should an obligation not be met. Personal property is generally property other than real estate. Arrangements subject to a PPS registration include charges over a company, chattel mortgages, conditional sale agreements, HP agreements, consignments, dry hire and leases of goods.


How does this affect me?


Many businesses are structured to separate their ‘asset holding’ from their ‘day-to-day operations’, a way of protecting the assets from the risks associated with a trading entity. The asset holding entity buys all of the assets needed for operating the business (land, plant & equipment etc) and these are then made available to the operating entity for use in running the business. The use of these assets by an operating entity creates a security interest under PPSA legislation.


Why do I have to do anything?


In an insolvency or liquidation scenario, any stock or assets that are in the possession of another party will be available to a liquidator unless a registered security interest has been undertaken by the owner of the asset. Inter-entity lease and hire arrangements are not exempt from PPSA legislation. Should security interests not be documented and registered, the legal owner would be treated as an unsecured creditor.


What do I have to do?


1. Know when you have a security interest

Review your business structure and identify any assets that are affected.


2. Document internal lease or hire arrangements

Having a written security agreement in place is the first requirement under the PPSA and should be tailored for a particular arrangement. A lease facility agreement will cover all future acquired property and avoids the need for a new agreement each time a new asset is purchased for the operating company.


3. Perfect your security interests on the PPSR

Perfection is a key concept under the PPSA. A perfected asset is one which has been registered on the PPSR and is the means by which an asset holder (the secured party) can protect and enforce its security interest.

Unperfected Assets are those that are not registered on the PPSR (therefore not protected) and potentially not recoverable in a liquidation scenario.

Perfection of a security interest is a straightforward, inexpensive process and is the only way to ensure your assets are fully protected. More and more frequently, Marsh & Partners are being requested by banks to register a security interest for financed assets if they are utilised by a different entity. Failure to do so may leave you in breach of your loan terms.


If these steps are taken, assets are able to be recovered from the operating company should a liquidator be appointed. The asset protection objective of the business structure is therefore preserved.


Further information and the online PPS Register can be found at



Further help:

Further information and the online PPS Register can be found at

To discuss the impact of the PPSA on your asset protection strategy, contact our Marsh & Partners advisors.  You can reach us on 07 3023 4800 or at

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