Identifying Your Grantor for the PPSR

You may have an ACN, ARSN, ARBN, ABN, RBN or even a Name which means you will almost certainly have a choice as to how you identify your business.  

While we often see choice as a good thing, this will not necessarily be the case when every option means an additional fee-incurring search you might need to undertake on a national register.

The Personal Property Securities Register (PPSR) has been designed as a national, publicly accessible, database where anybody, for the price of a cup of coffee, can run a search to see what security interests are held against a particular business or individual.

Because of that design, if a person conducting a search, in accordance with the PPSR’s guidelines, against a particular business is unable to see a security interest you lodged against that business then your registration will, in all likelihood, be deemed invalid and your security interest will be rendered ineffective.

Therefore, it is of the utmost importance that, when registering your security interest on the PPSR, you don’t just correctly identify the business against which you are taking your security but you identify that business in strict accordance with the PPSA’s rules.

Thus, while you might accurately transpose ABC Pty Ltd’s ABN onto the register by way of identifying your ‘Grantor’, the PPSA’s rule for identifying Pty Ltd companies is to use that company’s 9 digit ACN – this isn’t just a preference or a helpful guideline, but a fixed, unwavering insistence.  Your use of the company’s ABN isn’t just going to be the cause of a minor hiccup, swiftly cleared up by a quick phone call to the liquidator, it will, almost certainly, mean the complete and total loss of your security interest.

So what are the PPSA’s rules?

Firstly, the issue is whether your Grantor is an individual or an organisation.

If your Grantor is an individual, then, regardless as to whether they have an ABN or trading name, they need to be identified on the PPSR by the individual’s full name and date of birth.

If the Grantor is not an individual then they will be deemed an organisation.  It doesn’t matter that they are a husband & wife partnership, a local football club or Woolworths, they are all organisations.

The rules for organisations

The first question the PPSR will ask is “Does the organisation have an ARSN?”

This is equivalent to being asked, as a first question, upon registering with a new doctor, whether you have a third nipple!

An ARSN is an Australian Registered Scheme Number.  It is a 9 digit number issued to Australian managed investment schemes by ASIC.  It is a unique identifier and no two schemes can have the same number.

Next up, you are asked if the organisation has an ACN.  

An ACN is an Australian Company Number, it comprises 9 digits and is issued by ASIC to all companies incorporated under the provisions of the Corporations Act.  All your Pty Ltd customers will have an ACN and, even though they may not put it front and centre on their letterhead or will prefer to use their ABN when completing credit applications, this is the number you must use to identify such businesses. 

The only exception to this might be where the Pty Ltd company is specifically acting as trustee for a trust and using the ABN of that trust.

If your customer does not have an ACN you’ll be asked whether they have an ARBN.  

This is a little more common that an ARSN and stands for an Australian Registered Body Number, also comprising 9 digits and also administered by ASIC.  ARBNs are primarily issued to foreign companies wishing to operate in Australia.  Again, if the ARBN holding company is acting as the trustee of a trust with its own ABN, any registration should be lodged against the ABN of that trust.

Do not confuse an ARBN with an ABN – the two are quite different. 

If the organisation doesn’t have a 9 digit ACN, ARBN or ARSN then you will be asked to choose an appropriate category for your Grantor: Partnership, Body Politic, Trust, or Other.

Partnerships

The PPSA doesn’t care if this is a partnership of one or more individuals, a partnership between companies or a partnership between individuals and companies.  If the partnership has an ABN then use that number to identify your Grantor. 

If the partnership doesn’t have an ABN (not just that you don’t know it but that it hasn’t actually been issued with an ABN) then a registration should be lodged identifying the Grantor by the constituent parts of its partnership.  That is to say, if the partnership comprises two individuals then lodge the registration against each of those individuals stating their full names and dates of birth; if the partnership is between two companies then lodge the registration against each of those companies stating their ACNs.  

The PPSR allows for more than one Grantor to be identified on the same registration.

Bodies Politic

This is an all-embracing term for local, state and federal government entities.  The Government’s ABN Lookup facility provides an easy way of identifying such bodies if the way they’ve named themselves isn’t sufficient giveaway in itself:

Or

Many suppliers decide that the risks are sufficiently low when dealing with Government buyers not to bother lodging registrations against them, others may find that the terms of purchase they are required to accept do not include provision for any security interest that can be lodged on the PPSR.

Trusts

I won’t waste your valuable reading time with any more whinging regarding trusts and the idea that a trust is legally able to grant a security interest or indeed can be considered a legal entity in its own right, suffice to say that, for the PPSA’s purposes, a trust may be a discretionary trust, fixed trust, unit trust, trading trust, or any of a number of variations.  Again, the ABN Lookup facility can be useful here.

Others

We’re now left with everything else that doesn’t fall into one of the above categories which will include many charities, independent schools, sporting associations, strata plans and co-operatives to name but a few.

As far as the PPSA is concerned, it doesn’t matter if such organisations have an ABN; if they are not an individual, don’t have an ACN, ARSN or ARBN, and are not a partnership, body politic or trust, they need to be identified simply by the name of the organisation.

Whinge

Quite why the PPSA chooses to break the identification of Grantors into these arbitrary categories largely escapes me.  ASIC readily allows for searching its database for any 9 digit number it administers regardless as to whether it is technically an ACN, ARSN or ARBN – why does the PPSA care?

What benefit accrues from breaking down ABN holders into categories?  If a partnership can have registrations lodged against its ABN why can’t strata plans and co-operatives?  Why add extra hoops for registrants and searchers alike to jump through?  Why add additional opportunities for errors that could render registrations invalid?

Resources

This post is already long enough, so I’ll post a separate article providing some more links and hints for identifying the precise legal entity with which you are trading.