AUSTRALIA Law and Practice Contributed by: John Schembri and Erin Cartledge, Gilbert + Tobin
perfected by either control or registration. While financiers will always perfect security interests by registration of a financing statement on the Personal Property Securities Register (PPSR), the security document will also require deliv- ery of any physical share certificates and share transfer forms executed in blank to be delivered to the security trustee to allow perfection by control. If the shares being secured are shares in a listed company, a secured party can perfect its security interest over such shares by con- trol by entering into a Clearing House Electronic Subregister System (CHESS) security deed with the CHESS participant, under which the CHESS participant agrees to hold the shares subject to the secured party’s order. Inventory Security over tangible movable assets, which is stock-in-trade ( “inventory” under the PPSA), is usually a circulating security interest over fluc- tuating assets and is called “circulating asset” (as discussed in 3.6 Asset-Based Financing ). A security interest over tangible movable prop- erty is perfected by way of the registration of a financing statement on the PPSR. The timeframe within which to register a security interest over inventory on the PPSR is very short compared to other categories of collateral and can require that the security interest be registered on or prior to the day it is granted. Bank Accounts It is customary for bank accounts with regu- lated Authorised Deposit-taking Institutions (ADI accounts) subject to security to be held with an ADI. If the bank account is of material importance or value, an account control agree- ment will often be sought between the account holder, the security trustee and the ADI where the account is maintained, in addition to the registration of a security interest on the PPSR.
An ADI will have a security interest in an ADI account that is perfected by control by virtue of the ADI account being held with that ADI. Where the secured party is not also the ADI where the ADI account is held, an account control agree- ment may have been entered into to establish perfection by control because the ADI itself may have a superior ranking security interest in the account that would be perfected by control. Notwithstanding the legislative framework that affords superior ranking priority to security in an ADI account that is perfected by control, the entry into account control agreements for acqui- sition financings has become less typical in the market, and it is more common for a security interest in an ADI account to be perfected solely by registration. This is mainly due to a recent development in which many Australian banks implemented policies refusing to enter into any account control agreements. Receivables Security is commonly taken over claims and receivables (such as debts, trade receivables or contractual rights) and perfected by registra- tion. In certain circumstances, an assignment of receivables will also constitute a deemed secu- rity interest (and will be capable of a separate registration without the need for a standalone security document). Intellectual Property Rights A security interest over registered intellectual property rights (such as trade marks, patents, registered designs and copyright) are commonly registered on the PPSR to prevent a third party from acquiring an interest in those rights free of the security interest. Specific registers exist for patents, registered trade marks and regis- tered design rights, and security interests can be recorded in those registers maintained by the Intellectual Property Office of Australia, although
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