Every business owner in New Zealand that supplies goods on trade
credit or deferred payment arrangement should be familiar with the
PPSA (Personal Property Securities Act
1999) and the PPSR (Personal Property Securities
Register) and how the system operates.
Surprisingly, many businesses are not and fit into one of the
Operate with no knowledge of the personal property securities
system or security over products they are supplying;
Know they should be doing something but are not sure of what or
where to get advice;
Have some knowledge of the personal property securities system
but consider it too complicated to bother with;
Know something of the PPSR but have a system that is not
For these businesses, their first experience of the law relating
to the PPSR will often be when they are refused the return of goods
they have supplied to a debtor that has gone into liquidation or
In this context, ownership and non-payment of goods alone are
irrelevant. Proper documentation and the right procedures having
been followed are what counts.
Thousands of dollars are often lost due to small procedural
oversights such as failing to keep a copy of a signed Terms of
Trade or registering a financing statement on the PPSR.
This is a general summary of the Personal Property
Securities Act and Register incorporating some general
tips. This summary is a guide only and is not intend to replace
What is the PPSA and the PPSR?
"PPSA" stands for the Personal Property Securities Act
1999. The PPSA was introduced in 2002 and has
significantly reformed the law relating to security interests in
personal property. The PPSA contains a single set of rules for
security in all finance transactions including lending, leasing and
other credit-providing transactions. If you are in business, then
you should have knowledge of the PPSA and how it affects your
The PPSA only extends to personal property and does not cover
security interests in land. Personal property that has been
permanently affixed to buildings or land may also be deemed to form
part of land.
Personal property includes chattels, goods, documents of title,
intangibles, money, investment securities and negotiable
instruments. Essentially, personal property is every type of thing
capable of being owned that is not land.
The PPSA does the following:
a. Defines what a security interest is;
b. Provides the way priority competitions are determined between
secured parties with an interest in the same personal property;
c. Provides for the establishment of a register of security
interests called the Personal Property Securities Register.
1.5 "PPSR" stands for the Personal Property Securities Register.
The PPSR is an electronic internet-based register where a secured
party can register its financing statement against a debtor. A
financing statement is an electronic notice lodged by a secured
creditor that describes the security interest the secured creditor
has in the debtor's personal property.
What is the Purpose of the
The PPSR has the following functions:
a. "Perfects" a security interest by registration of the
b. Acts as a notice board where certain people can check what
securities are registered against a particular debtor and
"Perfection" is a term used in the PPSA which means a financing
statement has been registered in respect of the security interest
(or the creditor has possession of the collateral). Whether a
security interest is registered or unregistered is crucial if there
is a competition between creditors to claim goods as collateral. It
also is critical for a supplier wishing to have a super-priority to
the goods it has supplied on credit.
Registration of a financing statement does not give a creditor
any better rights than what it has under its security agreement.
For example, if the creditor has a Terms of Trade that secures all
the debtor's washing machines, by registering a financing statement
that records the collateral as all the debtor's washing machines
and clothes dryers, the creditor will still only be able to claim
it is secured in relation to the washing machines. Conversely, if a
creditor has a Terms of Trade that secures all the debtor's washing
machines and dryers, and the creditor registers a financing
statement which records the collateral as only the debtor's washing
machines, then the creditor has not perfected its security interest
in relation to the clothes dryers. The creditor will still have a
security interest in the clothes dryers but it may lose priority to
another creditor with a perfected security interest in the same
Who can search the PPSR?
The PPSR may only be searched for one of the following
a. An individual (or a person with the consent of the
individual), for the purpose of searching for information about
b. A debtor or secured party for a purpose that relates to the
debtor's or secured party's security interest in respect of which a
financing statement has been registered;
c. A person for the purpose of:
i. Establishing whether or not personal property that is to be
purchased or otherwise dealt with by the person is subject to a
ii. Establishing whether to provide credit to, or to obtain a
guarantee or an indemnity from, the person named in the search or
the person with an interest in the personal property described in
the search or a related company;
iii. Establishing whether to invest in, with, or through, the
person named in the search or a related company;
d. In limited circumstances, a liquidator, receiver or the
Official Assignee, executor or administrator of a deceased estate,
a lien holder, a charge holder, a bailiff, a news medium, the
Registrar, professional advisors of those people may perform a
Check our June 12 2014 blog for part two of our PPSA/PPSR series
- we will be covering what PPSA/PPSR can give the secured supplier
and security agreements.
Personal Property Securities Register
A secured party is responsible for registering and updating its
The web address for the PPSR is www.ppsr.govt.nz.
Secured Party Group
The secured party must register itself online as a "Secured
Party Group" before it is able to register financing statements.
The secured party only needs to register as a Secured Party Group
once. The Secured Party Group will be sent identification and pin
numbers for the PPSR. These should be securely stored as they will
be needed each a financing statement is registered or amended.
Details guidelines and tutorials for completing financing
statements can be obtained at www.ppsr.govt.nz. The following are
some further tips.
The secured party will need to know certain information about
its debtor before it can finalise the registration of a financing
statement. All this information should have been obtained from the
debtor on its application for credit/terms of trade or other
security agreement. For individuals, take a copy of personal
identification. For companies, perform a Companies Office search to
confirm the registered name and incorporation number.
Care should be taken when completing financing statements.
Mistakes in the debtor's name, incorporation number, collateral
serial numbers or collateral description can potentially invalidate
the financing statement or render it partially ineffective.
If the secured party has an ongoing supply agreement with the
debtor, it is only necessary to register one financing statement.
However, care should be taken to ensure that the collateral
description is broad enough to cover all supplies both present and
Once a financing statement has been registered, confirmation and
security details will be emailed to the secured party. These
details will need to be stored as they will be necessary to renew,
amend or delete the financing statement. A filing system should be
put in place to keep all financing statement pins/passwords and
security agreements. You will need these in the future.
Registrations of financing statement on the PPSR only last for 5
years. If a financing statement is not registered at the expiry of
the 5 years then the financing statement will expire and become
You must re-register a financing change statement if the company
or personal customer changes their name. You must do this within 15
days of becoming aware of the customer's new name or otherwise your
security interest may be subordinated to any other creditors who
register a security interest in your goods after that time.
Immediately register any other amendments to financing
statements such as changes to the collateral description.