13-Mar-2001
The Personal Property Security Act, Stats. P.E.I. 1997, Cap. 33 (the "PPSA") was proclaimed in force effective April 27, 1998. The PPSA introduced a comprehensive personal property security regime to replace existing registration systems established under the Bills of Sale Act, Conditional Sales Act, Assignment of Book Debts Act, Corporation Securities Registration Act, Bulk Sales Act and Potato Crop Mortgage Act (collectively, the "Old Acts"). Under the Old Acts, the time period during which a filing or registration was effective depended upon the duration of a filing or registration, if any, as stated under the old legislation.
However, the PPSA provided for a transition period during which security interests created by registrations or filings under the Old Acts would continue to be effective for a defined period of time, namely, the lesser of either three years from the date of proclamation (i.e. until April 26, 2001) of the PPSA, or until the date the original registration or filing expired under the Old Acts.
End of Deemed Registrations
Existing registrations or filings of security documents under the Old Acts were deemed to be registered under the PPSA. Such registrations will only remain valid until the earlier of either the expiry date of the registration under the applicable Old Act, or April 26, 2001. In order for a registration or filing under the Old Acts to continue to be valid, a financing statement must be entered in the PPSA Registry prior to the expiry date of the old registration or April 26, 2001, whichever date is earliest.
For example, existing registrations of debentures and trust deeds under the Corporation Securities Registration Act, or contracts under the Conditional Sales Act, in respect of which there was no obligation to renew, will be deemed to be expired and invalid unless a financing statement is entered in the PPSA Registry prior to April 26, 2001. Furthermore, security interests which did not previously require registration or filing under the Old Acts, such as true equipment leases or an assignment of a specific debt, must also be transitionally filed and entered in the PPSA Registry on or before April 26, 2001, in order to continue the effectiveness and validity of such security interests.
What Must I do Now to Protect My Security Interest?
Prompt attention is required to ensure that any filing or registration under the Old Acts which has an expiry date after April 26, 2001, is recorded and transitionally filed under the PPSA. Filing and registration particulars under the Old Acts as well as current names and addresses for the debtor and secured party are required in order to make a registration in the PPSA Registry. It will also be necessary to consider and determine what length of time the new registration under the PPSA will last. The PPSA permits a secured party to choose between a specific or perpetual registration life for a financing statement.
What Government Fees are Payable?
The filing fees payable to the Provincial Treasurer of Prince Edward Island for registering a financing statement are $24 for the initial or base registration itself, plus $7.00 per year for each year up to 25 years, or $500.00 where the registration is for more than 25 years or perpetual. Any fees paid in respect of a registration or filing under the Old Acts cannot be credited to fees payable under the PPSA registry.
How Do I Determine if I Have All Necessary Details for a Transitional Filing?
If a secured party is unsure as to whether a registration under the Old Acts has already been transitioned under the PPSA, or if certain details about an old registration are missing, a search of the computerized PPSA Registry and a manual search under the Old Acts can be conducted against the debtor name to determine whether a transitional filing has been effected or to confirm registration particulars of an old registration. A government fee payable for a name search under the PPSA is $8.00 per name.
How Can We Help?
Our corporate/commercial group in Prince Edward Island can assist secured parties by promptly assessing whether a transitional filing is necessary or has been effected. We can also make timely arrangements for any searches or filings that may be appropriate. In cases where an old registration or filing may have expired and not been transitioned under the PPSA, we can advise you as to the implications of such an expired registration.
For more information about the PPSA and the end of the transition period, please feel free to contact any member of our corporate/commercial group in Prince Edward Island:
Our Prince Edward Island office is located at 65 Grafton Street, P.O. Box 2140, Charlottetown, Prince Edward Island, C1A 8B9. Our fax number is 902.566.5283.
The information contained in this Client Update is intended for general information purposes only.
