Given the huge incentive for secured parties to “register wide” to ensure their registrations cover both the original collateral and any proceeds generated when collateral is disposed or transferred, the PPS Register will soon become cluttered for many grantors. If not cluttered by number of registrations, it will certainly become cluttered with the breadth of registrations. A search of the PPS Register against any given grantor (company) is likely to reveal at least several security interests registered against all present and after-acquired property.

The PPS Register is a “red flag” for secured parties to put their hand up and claim the security interest which they record on the PPS Register. A registration does not actually mean that a secured party has the security interest which they claim by registration. With this in mind, the PPS Register may, in some cases, be inaccurate or incorrect.

To help clean up the PPS Register and get rid of superseded, redundant, incorrect or inaccurate registrations, which will be important for secured parties and receivers, controllers or administrators appointed by them to sell assets, any person with either an interest (not a security interest) or a security interest in collateral can give a registered secured party an amendment demand. An amendment demand is a written demand to a registered secured party to lodge a financing change statement to amend the PPS Register either to end (remove) their registration, or remove particular collateral from their registration. Amendment demands may be given where it is alleged that the secured party no longer has a security interest in collateral (because, for example, they have been repaid)¹.

Secured parties can charge for the administrative effort of being required to lodge a financing change statement in answer to an amendment demand, but not where the collateral is consumer property².

If a secured party fails to respond to an amendment demand, there is a procedure by which the Registrar can be asked to give a secured party an amendment notice requiring correction of the Register as initially requested in the amendment demand³. A secured party would comply with an amendment notice, assuming the notice is correct, by lodging a financing change statement to correct or remove registrations as the case requires.

If an amendment notice from the Registrar is still not complied with within either five (5) business days, or such longer period as the Registrar allows, then the Registrar can themselves proceed to lodge a financing change statement to correct the PPS Register. The Registrar cannot do this, however, where the Registrar suspects on reasonable grounds that the requested amendment to the PPS Register is not correct⁴.

It is difficult to predict how pro-active the Registrar will be in removing or amending registrations where amendment notices have not been complied with. There is some suggestion that the amendment notice procedure may only be applied to minor errors such as “typographical errors”. This would be unfortunate indeed. The amendment notice procedure and power under sections 180 and 181 of the PPSA is much wider, and should be used to de-clutter the PPS Register where secured parties neglect to lodge financing change statements of their own accord. This is likely to be very important to receivers, administrators and liquidators of companies looking to sell encumbered assets, who are faced with numerous earlier registrations under which the secured parties have been repaid long ago, and cannot be contacted.

See sections 178 to 181 of the PPSA as to amendment demands and amendment notices.