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Business: Register assets or risk everything

Posted on 13/06/2016 by Rhiannon Smith
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Despite only taking several minutes online, and costing less than the morning cup of coffee, many businesses are failing to protect their legal rights of ownership.

Despite only taking several minutes online, and costing less than the morning cup of coffee, many businesses are failing to protect their legal rights of ownership.

The Personal Properties Securities Register (PPSR), a single national registry, allows businesses to protect their legal stake in personal property. Personal property takes on many forms from crops, aircraft, patents to equipment and is often most at risk when provided under a leasing or consignment agreement.

But despite the ease, low cost, and importance of registering an interest, Australian businesses risk derailing their entire business by failing to do so.

Recent legal cases highlight the importance of protection considerations, with Australian companies at severe risk of losing valuable assets for failing to register their own interests on the PPSR.

The national register came into effect more than five years ago, but many businesses are yet to realise the significance and potential damage of not registering assets or retention of title interests.

In the recent Forge Group Power Pty Ltd v General Electric International Inc case, General Electric lost $50 million of leased assets after Forge went into liquidation. Despite owning the assets, General Electric failed to make a registration on the PPSR to perfect their interest as the lessor.

This expensive failure to register by a multi-national should send warning bells to leasing businesses of the fundamental importance of ensuring PPS registrations are in place.

The Forge v General Electric decision serves as a timely reminder to all lessors of the inherent value of registering, highlighting the detrimental consequences of failing to do so.

There is a perception that the registration process is time consuming, complicated and expensive, but protecting assets and security interests is simple, quick, and something that legal advisors and businesses alike can do.

Leading law firm Minter Ellison partner Nick Anson said the Personal Property Securities Act had created a 'perfect or miss out model' where businesses who failed to correctly perfect an interest by registering a financing statement would lose out on their claim.

Read more on Business News Australia