King & Wood Mallesons

Asia-Pacific 100 position: 3

PPSA model clauses for a general security agreement

Since before the operational commencement of the Personal Property Securities Act 2009 (Cth) (PPSA) in January 2012, and certainly since then, law firms have been settling their position on the many issues it raises.

They have also been revising their precedent documentation. A document that was heavily affected by the PPSA was the traditional fixed and floating charge. The extensive changes made to the law and registration requirements by the PPSA resulted in substantial rewriting of firms’ standard charge documents. The replacement for the fixed and floating charge is now usually called a General Security Agreement (or Deed) (“GSA”). Evidence in the market is that different firms have taken different approaches to some essential elements of GSAs. The differences are not necessarily a matter of right or wrong, or better or worse (there are often several ways to deal with an issue), but these differences can cause confusion and unnecessary negotiation as parties seek to impose their preferred position on others, often based on an imperfect understanding of other firms’ different approaches. Without guidance, it may take a long time before the market settles…

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