Important PPSR update for Secured Parties: Do your financing statements need updating?
From 1 October 2018, a New Zealand Business Number (NZBN) will be a mandatory requirement for financing statements. Secured Parties have 2 months after 1 October 2018 to amend financing statements on the Personal Property Securities Register (PPSR) to ensure these comply.
The new requirements will affect any financing statement registered over a:
- limited partnership;
- incorporated society;
- incorporated charitable trust board;
- industrial and provident society;
- building society; or
- friendly society or credit union.
Failing to include a NZBN where one exists may risk the financing statement being seriously misleading under sections 150 and 142 of the Personal Property Securities Act 1999 and Schedule 1 of the Personal Property Securities Regulations 2001. This means that a financing statement may not be effective if it does not have a NZBN.
Will a NZBN be automatically added to financing statements?
MBIE will automatically add the NZBN to financing statements if the debtor’s organisation name, incorporation number and organisation type match the details in the relevant register where the organisation is registered.
It has been indicated that 92% of financing statements will have a NZBN populated in this way.
However, for any financing statements that are not automatically updated, Secured Parties will need to manually register a financing change statement to make this change. For example, this may be the case where:
- no incorporation number is included for a debtor, or is recorded incorrectly;
- the debtor’s name used “Ltd” rather than “Limited”;
- the debtor’s name has recently changed;
- there is a spelling mistake in the debtor’s name on the financing statement or the relevant register.
From 1 October 2018, Secured Parties have 2 months to amend their financing statements to ensure these comply.
How does a Secured Party know which financing statements will need to be updated manually?
While Secured Parties will be sent a general email from the PPSR, this will not list the specific financing statements requiring a manual update to include a NZBN.
It is possible to request from the PPSR a list of all financing statements within a SPG that do not have a NZBN — but where an organisation uses multiple SPGs (for example, across bank departments, or an SPG is created for a security trustee on a particular transaction), this will not be helpful.
What should Secured Parties do?
From 1 October 2018, Secured Parties should search all financing statements registered in their favour (across all SPGs) to ensure that, where relevant, these now have a NZBN.
Please let us know if you would like us to assist in these searches, or otherwise provide advice on the PPSA.