AUSTRALIA BELGIUM CHINA FRANCE GERMANY HONG KONG SAR INDONESIA (ASSOCIATED OFFICE) ITALY JAPAN PAPUA NEW GUINEA SINGAPORE SPAIN SWEDEN UNITED ARAB EMIRATES UNITED KINGDOM UNITED STATES OF AMERICA

An introduction to PPS Leases under the Personal Property Securities Act 2009 (Cth)

March 2014

2

PPS Leases defined

PPS Leases as PMSIs

Registering PPS Leases

The danger of unregistered PPS

Leases

PPS Leases v conventional

securityQuestions

Agenda

3

Security interests

Security interests

Mortgage

Charge

PPS Leases

Retention of title

sales

Sales of accounts

Bank account security

4

PPS leases definedLease or bailment of goods for …

More than one year, including any holding over or renewal• 90 days, for serial-numbered goods

An indefinite term

OR

BUT ONLY IFLessor/bailor is "regularly engaged in the business of leasing/bailing goods

Lessee/bailee provides value for the bailment

AND

5

Lease of goods for two years

Bailment of cars by manufacturer to dealer for sale

Lease of fittings in conjunction with lease of

premises

Aircraft / Vessel leases or charters

Hire of car for 100 days

PPS Lease examples

6

PPS Leases as purchase money security interests ("PMSIs")

Company Bank

Leased Products

General Security Interest (GSI)

loan

PPS LessorLease of product for

two year term (PMSI)

Unpaid rentals

GSI attaches to Products

Lease (PMSI) attaches to Products

Red = priority contestROT = retention of title salePMSI = purchase money security interest

7

ROT sales Purchase finance (security interest taken by a person who

gives value to enable the grantor to acquire collateral)

PPS leases Commercial consignments

PMSIs

Four types of PMSIs

8

Registering PPSLeases

Key classes of collateral for registration

Tangible property

General property

Intangible property

Financial property

Motor vehicles

Watercraft

Aircraft

Agriculture

All present and after-acquired

property("Allpap")

Accounts Investment instruments (eg shares)

Intermediated securities

(eg ASX-listed shares)

Other goods

All present and after-acquired

propertyexcept ("Allpape")

General intangible

s

10

The danger of unregistered leasesIn re Maiden Civil (P&E) Pty Ltd [2013] NSWSC 852

Lessor /Bailor(QES)

Lessee /Bailee

(Maiden)

Lease of Caterpillar vehicles

Security for loan to QES

Fast Financial

GSD = general security deed

GSD

Loan

Esanda/ Westpac

QES Affiliate

Loan

11

Unresolved conceptual issues

Lender LessorSecurity

Lessee

PPS lease

Does the Lender retain security over the asset, or does it instead only get

security over the Lessor's rights under the PPS lease (as proceeds)?

If the Lender does retain security over the asset, does it need to re-register

against the Lessee?

The answer may turn in part on whether the PPS lease constitutes a "transfer" of

the asset to the Lessee, at least for PPSA purposes.

Leasing structures

AUSTRALIA BELGIUM CHINA FRANCE GERMANY HONG KONG SAR INDONESIA (ASSOCIATED OFFICE) ITALY JAPAN PAPUA NEW GUINEA SINGAPORE SPAIN SWEDEN UNITED ARAB EMIRATES UNITED KINGDOM UNITED STATES OF AMERICA

This presentation material is intended to provide a summary of the subject matter covered for training purposes only. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this presentation without first obtaining specific professional advice. 228783207

221808381