General Security Agreement Template for Australia

A General Security Agreement is one of the most important documents in Australian commercial lending, providing lenders with comprehensive security over a borrower's present and future assets. Under the Personal Property Securities Act 2009 (Cth), this agreement creates legally enforceable security interests that protect lenders in the event of default or insolvency.

When do you need this document?

You need a General Security Agreement whenever you're entering a secured lending arrangement where broad asset coverage is required. This typically occurs in commercial loan facilities where banks or financial institutions require security over all of a company's assets, including inventory, equipment, accounts receivable, and intellectual property. The agreement is essential for acquisition financing, where purchasers need to secure loans against the target company's assets, and for working capital facilities that fluctuate based on business operations. Syndicated lending arrangements also rely heavily on these agreements to ensure all lenders receive equal security coverage across multiple facilities.

Key legal considerations

The agreement must clearly define the scope of collateral covered, typically using "all present and after-acquired property" language to capture future assets. Priority arrangements are crucial, as they determine ranking against other security holders and must comply with PPSA priority rules. The document should include comprehensive representations and warranties about the grantor's ownership of assets and absence of competing interests. Enforcement provisions must specify the secured party's rights upon default, including appointment of receivers and asset disposal rights. Default triggers should be carefully defined to include not just payment defaults but also breaches of financial covenants, material adverse changes, and cross-defaults with other facilities. The agreement must also address permitted dealings with collateral, specifying what the grantor can do with secured assets in the ordinary course of business.

Legal requirements in Australia

Under the Personal Property Securities Act 2009 (Cth), the security interest must be registered on the Personal Property Securities Register (PPSR) within prescribed timeframes to achieve perfection and priority protection. The registration must accurately describe the collateral and parties involved, with specific serial number requirements for certain asset types. Corporate execution requirements under the Corporations Act 2001 (Cth) must be satisfied, typically requiring execution by two directors or a director and company secretary. The agreement must comply with Australian Consumer Law if it involves small business contracts, particularly regarding unfair contract terms provisions. Privacy Act 1988 (Cth) compliance is necessary when handling personal information during credit assessment and ongoing administration. The document should include specific PPSA terminology and comply with attachment requirements, ensuring the security interest is legally effective from the outset.