The four key ways to perfect a security interest are as follows:

1. Registration: registration is the most common way to perfect a security interest. Registration is conducted by lodging a financing statement online on the PPS Register - www.ppsr.gov.au;

2. Possession: possession is available for all types of collateral that is capable of possession. This would exclude most intangible property. Perfection by possession will not be practical for most collateral used in business because the grantor loses the economic use of the collateral from its business;

3. Control: control is available for only six (6) classes of mainly “financial” collateral, being¹:

(i) ADI accounts (bank accounts);

(ii) intermediated securities (forexample,ASX- listed shares);

(iii) investment instruments (for example, unlisted shares and bonds);

(iv) letters of credit;

(v) negotiable instruments not evidenced by certificate; and

(vi) satellites and space objects;

4. Temporary perfection: temporary perfection is "automatic perfection" that the PPSA applies to certain classes of security interests for fairness, to temporarily protect them for a short period to give the secured party an opportunity to actually perfect under the PPSA, so that continuous perfection (and so their original priority time) is preserved.

Temporary perfection applies mainly to:

(i) transitional security interests;

(ii) proceeds of collateral generated when original collateral is disposed;

(iii) transfers of collateral, when the grantor sells or leases collateral to others and security interests are not extinguished; and

(iv) relocations of collateral from overseas to Australia which creates a connection to Australia and enlivens the application of the PPSA.

Temporary perfection is discussed further below commencing at paragraph 17.7.1.