AMENDMENTS TO THE PERSONAL PROPERTY SECURITY ACT
octobER 2015 | AUTHOR: joanne gilbert-wiens
Bill 152, An Act to modernize various Acts administered by or affecting the Ministry of Government Services (2006), received royal assent on December 20, 2006, and amendments to the Personal Property Security Act (“PPSA”) were introduced.
Conflict of Laws
While certain amendments to the PPSA have not yet come into force, on December 31, 2015, the conflict of laws rules in Section 7 of the PPSA will be amended. Currently, under the PPSA, it is the laws of the jurisdiction in which the debtor is located that determines the validity and perfection of a security interest in certain collateral. On December 31, 2015, these provisions will change to provide that the location of a business debtor is no longer defined by reference to the debtor’s place of business, but by reference to the laws of the province, territory of U.S. state under which the debtor is incorporated or organized.
For example, a debtor who is an individual is located in the jurisdiction where his/her principal residence is located. If the debtor is a corporation incorporated under the laws of a province or territory, the debtor is located in the jurisdiction of the province or territory in which it was incorporated. If the debtor is a federally incorporated corporation, the debtor is located in the jurisdiction where its registered office or head office is located.
Transitional rules have been added to ensure that existing priorities are not
affected and to give secured parties time to adapt to the new system.
New Classification System
In addition, the “check box” system for classifying collateral will also be changed. Currently, the system for classifying collateral involves checking up to five boxes on the financing statement, namely “consumer goods”, “inventory”, “equipment”, “accounts”, and “other”. Under the new system, the secured party will be required to enter a description of the collateral by item or type.
Conclusion
These amendments will improve the PPSA registration system, making it more user-friendly and creating certainty when determining the location of a debtor.
If you have any questions relating to any of the above, please do not hesitate to contact Joanne Gilbert at jgilbert@kmblaw.com or 905.276.0406.
Conflict of Laws
While certain amendments to the PPSA have not yet come into force, on December 31, 2015, the conflict of laws rules in Section 7 of the PPSA will be amended. Currently, under the PPSA, it is the laws of the jurisdiction in which the debtor is located that determines the validity and perfection of a security interest in certain collateral. On December 31, 2015, these provisions will change to provide that the location of a business debtor is no longer defined by reference to the debtor’s place of business, but by reference to the laws of the province, territory of U.S. state under which the debtor is incorporated or organized.
For example, a debtor who is an individual is located in the jurisdiction where his/her principal residence is located. If the debtor is a corporation incorporated under the laws of a province or territory, the debtor is located in the jurisdiction of the province or territory in which it was incorporated. If the debtor is a federally incorporated corporation, the debtor is located in the jurisdiction where its registered office or head office is located.
Transitional rules have been added to ensure that existing priorities are not
affected and to give secured parties time to adapt to the new system.
New Classification System
In addition, the “check box” system for classifying collateral will also be changed. Currently, the system for classifying collateral involves checking up to five boxes on the financing statement, namely “consumer goods”, “inventory”, “equipment”, “accounts”, and “other”. Under the new system, the secured party will be required to enter a description of the collateral by item or type.
Conclusion
These amendments will improve the PPSA registration system, making it more user-friendly and creating certainty when determining the location of a debtor.
If you have any questions relating to any of the above, please do not hesitate to contact Joanne Gilbert at jgilbert@kmblaw.com or 905.276.0406.
This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice on their specific situations.
