All Present and After-acquired Property Security in New Zealand

If a lender, supplier or finance company asks your business to give an all present and after-acquired property security, the stakes are usually higher than founders first realise. A common mistake is assuming it only covers one asset, such as a vehicle or piece of equipment. Another is signing the finance documents without checking whether the security reaches future stock, receivables, IP or other business assets you have not even acquired yet. A third is failing to think through how that security will affect later fundraising, refinancing or supplier arrangements.

For many New Zealand businesses, an all present and after-acquired property security can be a normal part of borrowing. But it is also one of the broadest forms of security you can grant. That means it can limit flexibility, create priority issues with other creditors and make enforcement much more serious if things go wrong. This guide explains what this type of security means, when it comes up, what founders should check before they sign a contract review and the practical mistakes that often cause problems later.

Overview

An all present and after-acquired property security, often called an all-assets security or general security, gives a secured party rights over a wide pool of business property. In New Zealand, these arrangements are usually dealt with under the Personal Property Securities Act 1999, often called the PPSA, and are commonly recorded on the Personal Property Securities Register, or PPSR.

The main issue is scope. A clause that looks standard can affect current assets, future assets, priority with other creditors and what happens if the business defaults.

• Check exactly what property is covered, including stock, equipment, receivables, bank accounts, intellectual property and future acquisitions.
• Confirm who is taking the security, what obligations it secures and whether guarantees are also involved.
• Review whether the security is being or has been registered on the PPSR, and whether the registration details are accurate.
• Understand what limits apply to dealing with assets in the ordinary course of business.
• Look at how the security may affect later borrowing, investor funding, supplier terms and asset sales.
• Check default and enforcement clauses, including when the secured party can appoint a receiver or take control of assets.

What All Present and After-acquired Property Security Means For New Zealand Businesses

An all present and after-acquired property security usually means your business is giving a lender or other secured party a security interest over nearly all of its personal property, both now and in the future. That makes it much broader than finance secured only against a single item.

In plain English, “present property” means assets your business already owns or has rights in when you sign. “After-acquired property” means assets the business obtains later. If the wording is broad, that can include new stock, new equipment, debts owed to you by customers, and in some cases rights under contracts or other valuable business property.

What counts as personal property?

Under the PPSA, personal property is wider than many founders expect. It does not just mean physical goods. It can cover a broad range of business assets, such as:

• plant, machinery and equipment
• inventory and trading stock
• accounts receivable and invoice debts
• vehicles and mobile assets
• certain contractual rights
• intellectual property-related rights, depending on the asset and drafting
• bank account proceeds and sale proceeds, depending on the circumstances

Land is treated differently, so this type of security is not the same as a mortgage over real property. But for many SMEs, most operating assets are personal property, which is why this security can be so far-reaching.

Why lenders ask for it

Lenders ask for all-assets security because it improves their position if the borrower defaults. Instead of relying on one asset that may drop in value, they can claim against a larger pool of business property. That can make the lender more willing to provide finance, extend overdraft facilities or support working capital arrangements.

Trade suppliers, invoice financiers and related-party funders may also ask for broad security. It is not limited to banks.

How the PPSR fits in

A security agreement creates the security interest between the parties, but registration on the PPSR is often what protects priority against other creditors and certain third parties. If two parties claim security over the same assets, priority can depend on the type of collateral, the timing of perfection and the registration details.

This is where founders often get caught. They focus on the loan amount and repayment terms but do not ask what is being registered, whether the collateral description is accurate or whether an old registration should be discharged after a facility is repaid.

Why this matters beyond borrowing

An all present and after-acquired property security can affect day-to-day operations and future deals. It may:

• limit your ability to grant security to a new lender
• complicate a business sale or asset sale
• raise due diligence issues during capital raising
• restrict dealings with key assets outside the ordinary course of business
• increase risk if the business hits cash flow trouble

For an early-stage company, this can matter just as much as the finance itself. A broad security granted too early, or on poor terms, can become a roadblock when the business grows.

When This Issue Comes Up

This issue usually comes up when a business is borrowing money, taking equipment finance, entering a working capital facility or negotiating supplier credit on less than standard terms. It often appears in documents founders sign quickly because the funding is urgent.

Bank loans and overdrafts

A bank may require all-assets security for a term loan, revolving credit line or overdraft. This is common where the business has limited trading history or where the bank wants broad protection rather than security over one asset only.

Before you sign, check whether the security is limited to the borrowing entity or also tied to personal guarantees, related companies or trust structures. The legal and commercial risk can spread further than expected.

Equipment, vehicle and asset finance

Some founders assume equipment finance will only be secured against the financed item. Sometimes that is true, but not always. A financier may ask for wider security, especially if the borrower is a startup or has a weaker balance sheet.

That can be a surprise if you thought you were just financing a van, server hardware or manufacturing equipment. The document title may focus on the asset, while the security clauses reach much further.

Supplier and trade credit arrangements

Large suppliers sometimes include security language in their terms of trade or supplier agreement. A supplier may seek a security interest over supplied goods, proceeds of sale, or broader circulating assets if they are extending significant credit.

This is particularly relevant for retail, wholesale, ecommerce and import businesses where inventory turns quickly. If goods are sold on, questions around proceeds and priority can become important very fast.

Founder loans and related-party funding

Private investors, directors or associated entities sometimes lend to the business and document that loan with general security. That can be commercially sensible, but it should still be properly documented and registered if intended to be enforceable against third parties.

Informal arrangements create problems later, especially during external investment rounds when new funders ask who already has security over the company’s assets.

Refinancing, capital raising and M&A

Broad security interests often surface again during due diligence. A new lender may refuse to advance funds until an earlier secured party releases or subordinates its position. A buyer may want old PPSR registrations cleared before completion. Investors may ask whether the company’s key assets are already encumbered.

These issues are easier to manage before you spend money on company setup, legal fees and transaction costs for the next deal.

Practical Steps And Common Mistakes

The safest approach is to treat an all present and after-acquired property security as a major commitment, not boilerplate. The right review before you sign can save a lot of cost and disruption later.

1. Read the security clause, not just the commercial summary

The term sheet or facility letter may say one thing in broad terms, but the general security deed or loan agreement is what sets the legal scope. Look for wording that captures all present and after-acquired personal property, all undertaking, all assets, or similar wide descriptions.

Check whether the security covers:

• only the borrower’s obligations under one facility
• all present and future obligations to the secured party
• amounts owed under related agreements
• costs, default interest and enforcement expenses

A broad obligations clause can matter almost as much as a broad collateral clause.

2. Work out what assets your business actually needs free of security

Some businesses can operate comfortably with a general security in place. Others need flexibility over key assets. For example, a software business may care deeply about trade mark and IP rights and receivables. A retailer may need room to negotiate stock finance. A manufacturer may later want equipment-specific funding.

Before you sign, identify the assets most likely to matter for future funding, sale or restructuring. If there is a strong reason, you may be able to negotiate carve-outs, limits or a narrower form of security.

3. Check PPSR registration details carefully

Registration mistakes can create serious issues. An error in the debtor name, company number, collateral class or registration period can affect perfection or cause search confusion.

At a practical level, check:

• the exact legal name of the borrowing entity
• the New Zealand Company Number or other identifier used
• whether the registration matches the actual security agreement
• whether the collateral description is appropriate
• whether any old registrations should have been discharged

This is not just an admin point. A flawed or stale registration can disrupt refinancing and due diligence.

4. Understand ordinary course trading versus restricted dealings

Many security arrangements allow the business to sell inventory and collect receivables in the ordinary course of business until default. That does not mean you can freely dispose of major assets, restructure the company or grant further security without consent.

Review any restrictions on:

• selling significant assets
• creating new security interests
• changing business structure
• paying distributions
• making major acquisitions
• entering related-party transactions

Founders often discover these constraints only when a transaction is already underway.

5. Do not ignore default triggers

The main risk is not just missing a repayment. Default clauses can include wider triggers such as insolvency events, misleading statements, cross-default under other agreements, unauthorised disposals, or material adverse change wording.

If default occurs, the secured party may have rights to enforce, appoint a receiver or take control of secured assets, depending on the documents and the law. You want to know where the red lines are before cash flow gets tight.

6. Coordinate guarantees and security

Security documents often sit alongside personal guarantees from directors or shareholders. That combination changes the risk profile significantly. If the business defaults, the lender may have claims both against business assets and against guarantors.

Make sure everyone involved understands the package as a whole, including:

• who is borrowing
• who is guaranteeing
• what assets are secured
• whether related entities are also bound
• what release conditions apply once the debt is repaid

7. Plan for the end of the facility

One common mistake is assuming the security disappears automatically once the debt is cleared. In practice, discharge steps may still be needed, especially for PPSR registrations and any supporting documents.

Keep records of the finance being repaid and confirm the release process. This matters when you later sell the business, bring in investors or refinance.

Common mistakes founders make

Most problems come from speed, assumptions and poor document management. The most common mistakes include:

• signing broad security for a relatively small facility without considering future impact
• assuming the security only covers one financed asset
• failing to search the PPSR during due diligence or before new funding
• forgetting to remove old registrations after repayment
• granting overlapping security to multiple parties without clear priority arrangements
• not checking whether terms of trade also contain security language
• treating related-party security as informal and leaving it undocumented

These are fixable issues, but they become more expensive once a transaction is live or a dispute starts.

FAQs

Is an all present and after-acquired property security the same as a guarantee?

No. A guarantee is a promise by another person or entity to meet the borrower’s obligations if the borrower does not. An all present and after-acquired property security is a security interest over business assets. They are often used together, but they do different jobs.

Does this type of security cover assets the business buys later?

Usually yes, if the document is drafted broadly enough. That is the point of the “after-acquired” wording. It can catch future stock, equipment, receivables and other personal property acquired after signing.

Can my business still trade normally if it has given all-assets security?

Often yes, at least while there is no default and the documents allow ordinary course dealings. But there may be restrictions on major asset sales, new finance, restructuring or granting further security, so the documents need to be checked carefully.

Do I need to register the security on the PPSR?

The security agreement can still exist between the parties without registration, but registration is usually important to protect priority and enforceability against third parties. Whether and how to register depends on the transaction and the parties involved.

What should I do before signing one of these clauses?

Review the scope of assets covered, the obligations secured, any guarantees, the enforcement triggers and the likely PPSR registration. You should also think about how the security might affect future borrowing, investment and sale plans.

Key Takeaways

• An all present and after-acquired property security is one of the broadest forms of business security and can cover both current and future personal property.
• In New Zealand, these arrangements commonly sit within the PPSA framework and are often protected through PPSR registration.
• The real issue is not just getting finance now, it is how the security affects future funding, supplier arrangements, asset sales and enforcement risk.
• Founders should review the scope of assets, obligations secured, default clauses, guarantees, PPSR details and release steps before they sign.
• Common mistakes include assuming the security only applies to one asset, missing stale or incorrect PPSR registrations, and not planning for discharge once the debt is repaid.

If your business is dealing with all present and after-acquired property security and wants help with reviewing security documents, PPSR registration issues, lender negotiations, and guarantee terms, you can reach us on 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.