Security interests automatically attach to proceeds of collateral, but must also be perfected against proceeds.

Proceeds are identifiable or traceable personal property derived directly or indirectly from a dealing in collateral or proceeds of collateral, in which the grantor has or retains an interest¹

From above, a registration against original collateral will be effective also to perfect a security interest against proceeds of collateral generated when the collateral is disposed or transferred, provided that the proceeds fall within the classe(s) of collateral covered by the registration against the original collateral². For example, if the original registration is against all present and after acquired property, that original registration will also perfect the security interest against any proceeds generated from the original collateral.

A registration that is against a narrow class of original collateral (for example, a registration against motor vehicles only) can cover proceeds as well, either all proceeds generated from the original collateral (motor vehicles), or specific items or classes of proceeds.

To summarise, proceeds can be registered against either in a wide or narrow manner, as follows:

(a) for all proceeds, secured parties can either:

1. 1. 1. 1. register widely against original collateral (for example, register against all present and after-acquired property), which will also automatically perfect against all proceeds generated from the original collateral; or
         2. register narrowly against original collateral (for example, register against a truck in the case of a truck mortgage) and register against all proceeds generated from the original collateral (the truck);

(b) for particular items of proceeds, secured parties must register against that item plus a class of collateral to which it belongs³. The idea is to ensure the proceeds are clearly identified by providing for two methods of identification, both the particular item(s) of proceeds and the class of collateral to which it or they belong(s). For example, “all proceeds in the form of currency and financial property”; or

(c) for particular classes of proceeds, registration must be against the class plus a wider class of collateral to which it also belongs⁴. Again, the idea is to ensure clear identification. For example, “all proceeds in the form of accounts and intangible property”.

Perfection is automatic (even without registration) where the proceeds are money deposited into an ADI account, currency, cheques or insurance indemnity payments for damage to collateral⁵ This is provided a registration perfected the security interest against the original collateral before its disposal to generate proceeds.