NEW ZEALAND Law and Practice Contributed by: David Weavers, Jesse Fairley and Matt Consedine, Russell McVeagh
is in the possession of the secured party or the debtor has signed or assented to the security agreement which contains a descrip- tion of the secured collateral). “Attachment” is the point at which a secured party acquires an in rem/proprietary interest in the collateral (ie, a security interest is created). Once “attachment” has occurred, security over personal property will be “perfected” when: • the secured party has taken possession of the collateral; or • a financing statement has been registered on the Personal Property Securities Register (the “PPSR” ). It is customary for each security interest to be perfected by registering a financing statement on the PPSR. However, a secured party will usually also take possession of certain types of collateral, such as shares, in order to give the secured party the best protection against other potential secured creditors or third parties claiming an interest in the collateral. In respect of shares, secured parties will typically obtain all share certificates (if the shares are certificated), record the security interest over the shares in the share register of the company or with the relevant clearing house or securities depository (with respect to listed securities) and, to assist enforcement, obtain blank executed stock trans- fer forms. Under the PPSA, the general priority rules are as follows. • A perfected security interest has priority over an unperfected security interest in the same collateral. • If competing security interests are all perfect- ed, priority will then be given to the secured
party that was the first to register a financing statement or take possession of the collateral (this is the case even if the security interest had not yet attached at the time of registra- tion). • If none of the competing secured interests are perfected, priority then goes to the first secu- rity interest that attached to the collateral. The PPSA contains a number of exceptions to There is no particular form of security agreement that must be used when taking security over per- sonal property. Security agreements governed by New Zealand law will be in the form of deeds (rather than sim- ple contracts). This is because a security agree- ment typically contains a power of attorney granted by the grantor in favour of the security party. Under New Zealand law, an attorney can only execute a deed if it itself has been appoint- ed by a deed. these general priority rules. 5.2 Form Requirements See 5.1 Types of Security Commonly Used in relation to registration of security over real prop- erty. 5.3 Registration Process Personal Property As mentioned in 5.1 Types of Security Com- monly Used , a registration will be made to per- fect a security interest over personal property. Certain key information is recorded in the financ- ing statement that is registered on the PPSR. This includes the names and addresses of the debtor and the secured party and a description of the collateral. The registration can be made instantly for a nominal fee. The maximum reg- istration period for a financing statement is five
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