Five Major Law Firms Announce Model General Security Agreement under PPS

Responding to a cerain level of uncertainty caused by the introduction of the Personal Property Securities Act 2009 (Cth) (the PPSA), five major Australian/international law firms have collaborated to produce a set model clauses (a suggested standard) for the key provisions to be included in a General Security Agreement (the GSA) which has become a key contractual document under the PPSA.

Background

The document most heavily affected by the enactment of the PPSA was the traditional fixed and floating charge now replaced by the GSA. The PPSA model clauses are meant to "represent a distillation of the five firms’ ideas and thinking" on several important issues and are consensus positions. They are not biased towards either grantors’ or secured parties’ interests.

The footnotes that accompany the clauses explain the thinking behind the decisions made in drafting the clauses and help understand the intended operation of these provisions. 

The move to produce the model clauses has been praised as "highly commendable". The five Australian/international law firms are:

• Allens,

• Ashurst,

• Herbert Smith Freehills,

• King & Wood Mallesons and

• Norton Rose.

Availability and Use

The firms have released “the PPSA model clauses” for a GSA publicly on their websites and it is reported the firms have no objection to the model clauses being used by any other person in the market if they consider them appropriate for their precedents or a particular transaction. See text of clauses here.

Sources:

• PPSA model clauses for a general security agreement released

• PPSA model clauses: General security agreement (link to text at Herbert Smith Freehills)

• Client Update: PPSA Model Clauses for a General Security Agreement

Our Corporations Point-in-Time Service is current and pro-active, providing users with a one stop shop for Corporations legislation.  Contact us for a free trial.