On May 16, 2019, British Columbia proclaimed into force amendments to the conflict of laws rules in the Personal Property Security Act (the “PPSA”). Effective June 1, 2019, British Columbia also amended the PPSA rules for determining the location of a debtor.
These amendments clarify the laws secured parties will need to consider when perfecting security interests, particularly in regards to the location of the debtor for security agreements involving mobile goods, intangibles, and non-possessory documentary collateral.
This article focuses on the changes to the location of the debtor rules. For a discussion on the effect of adding the term “priority” into the conflict of laws sections, download our Whitepaper using the button below.
The PPSA Amendments
Through the recent PPSA amendments, British Columbia set objective standards for determining the location of the debtor, using information ascertainable by secured creditors. These amendments were intended to provide more certainty in determining the location of the debtor, removing the previous need to register in multiple jurisdictions.
|Type of Debtor||Deemed Location of Debtor|
|Individual||Jurisdiction of principal residence|
|Corporation, limited partnership, or other organization organized under provincial law||Province of incorporation, amalgamation or organization|
|Federal corporation||Registered or head office as set out in constating documents (e.g., Articles) or, if not in constating documents, its Bylaws|
|Partnership, other than a limited partnership||Province specified in the partnership agreement as the governing law|
|Trustees acting for a trust||Province specified in the trust deed as the governing law or, if not applicable, the jurisdiction where the administration of the trust is principally carried out|
|U.S. organization registered under laws of a U.S. state||U.S. state of registration|
|U.S. organization registered under U.S. federal laws||U.S. state designated by U.S. federal law, or the U.S. state designated by the organization if permitted to make such designation under U.S. federal law or, if the foregoing are not applicable, the District of Columbia|
|None of the above||Jurisdiction where the debtor’s chief executive office is located|
British Columbia has not defined “chief executive office”. Therefore, if the debtor does not fall into any of the specified types of debtors, there could still be uncertainty surrounding the location of the debtor, resulting in an ongoing need to register in multiple jurisdictions.
British Columbia’s amendments regarding the location of a debtor are very similar to those adopted by Ontario and Saskatchewan. However, the remaining provinces have not yet adopted similar amendments. The debtor location rules for these other provinces correspond closely to British Columbia’s old debtor location rules.
Until the laws of all provinces are harmonized, secured creditors should be aware that they may have to register security interests in multiple provinces. For instance, a British Columbia corporation with operations solely in Alberta would be “located” in both Alberta under Alberta’s existing rules, and British Columbia under the new British Columbia deeming rules. This security interest would need to be registered in both British Columbia and Alberta to ensure proper perfection.
The expectation is that the other provinces will follow British Columbia, Ontario, and Saskatchewan in adopting similar amendments to avoid unnecessary registration duplication.
For a discussion of the deemed location of a debtor in Ontario, see our EKB article about Ontario’s amendments to its PPSA.
EKB’s Commercial Lending and Finance team is knowledgeable and experienced in these areas and can assist you further.