Surprise! BC amends the Personal Property Security Act

Written by Denise Bright

In 2010, the BC Government passed the Finance Statutes Amendment Act, 2010 but certain provisions did not immediately come into force relating to the Personal Property Security Act (British Columbia). On June 1, 2019, certain provisions of such Act relating to determining debtor location for the purposes of the Personal Property Security Act (British Columbia) became effective.

The new provisions provide that a debtor is located:

1. if the debtor is an individual, in the jurisdiction in which the debtor's principal residence is located,
2. if the debtor is a partnership, other than a limited partnership, and the partnership agreement governing the partnership states that the agreement is governed by the laws of a province, in that province,
3. if the debtor is a corporation, a limited partnership or an organization and is incorporated, continued, amalgamated or otherwise organized by or under a law of a province, which law requires the incorporation, continuance, amalgamation or organization to be disclosed in a public record, in that province,
4. if the debtor is a corporation incorporated, continued or amalgamated by or under a law of Canada, which law requires the incorporation, continuance or amalgamation to be disclosed in a public record, in the jurisdiction in which the registered office or head office of the debtor is located,
   1. as set out in the special Act, letters patent, articles or other constating instrument by or under which the debtor was incorporated, continued or amalgamated, or
   2. as set out in the debtor's bylaws, if subparagraph (i) does not apply,
5. if the debtor is a registered organization that is organized by or under a law of a state (as defined), in that state,
6. if the debtor is a registered organization that is organized by or under a law of the United States of America,
   1. in the state that the law of the United States of America designates, if the law designates a state of location,
   2. in the state that the registered organization designates, if the law of the United States of America authorizes the registered organization to designate a state of location, or
   3. in the District of Columbia in the United States of America, if subparagraphs (i) and (ii) do not apply,
7. if the debtor is one or more trustees acting for a trust,
   1. if the trust instrument governing the trust states that the instrument is governed by the laws of a province, in that province, or
   2. in the jurisdiction in which the administration of the trust by the trustees is principally carried out, if subparagraph (i) does not apply, …

If none of the above rules are applicable, the location of the debtor will be where the "chief executive office" of the debtor is located.

Existing security interests perfected prior to this amendment remain perfected until the earlier of: (a) the day perfection ceases under the prior law; and (b) June 1, 2024. A security interest will remain continuously perfected after such dates if the registration either already complies with the new provisions or is amended prior to the foregoing dates to comply with the new provisions.

Any amendment, renewal or extension to a security agreement under which the security interests were perfected under prior law which adds collateral must comply with the new provisions in order to perfect the security in the new collateral.

Please contact us if you would like to discuss the impact of this change on your registrations.