Company Charges and the PPSR in New Zealand: What You Need to Know

If you’re running a business, you’ll probably deal with finance at some point - whether that’s a bank loan, a supplier giving you credit terms, or an investor wanting security for their funding.

That’s where the idea of a company charge comes in. It’s one of those legal concepts that sounds technical, but it’s really about something simple: who gets paid first if things go wrong.

This article is general information for New Zealand businesses and isn’t legal advice. Security arrangements are highly fact-specific, so it’s worth getting advice on your particular documents before you rely on them.

In New Zealand, security over most business assets (other than land) is generally dealt with as a security interest under the Personal Property Securities Act 1999 (PPSA), and (where appropriate) recorded on the Personal Property Securities Register (PPSR). Getting this wrong can be expensive - especially if you think you’re protected as a lender or supplier, but your security was never properly registered.

Below, we’ll break down what people usually mean by a company charge, how the PPSR fits in, what it means for your business, and what to do before you sign anything.

What Is a Company Charge (In Plain English)?

A company charge is a way for a business to give another party security over the company’s assets.

Practically, it usually comes up when your company:

• borrows money (for example, a business loan);
• buys equipment on finance (like vehicles, machinery, IT systems);
• gets goods on credit from a supplier; or
• enters an agreement where the other party wants “security” that they’ll be paid.

The “charge” means the lender/supplier (the secured party) has rights to certain assets (the collateral) if the company doesn’t meet its obligations (like repaying a loan).

So, instead of being just another unsecured creditor waiting in line, a secured party can potentially:

• enforce their security and take/repossess certain assets;
• get paid out of the proceeds of those assets; and/or
• rank ahead of unsecured creditors if the company becomes insolvent.

For small businesses, this matters because security can affect your cashflow, your ability to raise finance later, and what happens if you ever need to restructure or sell the business.

How Company Charges Work Under The PPSA And PPSR

In New Zealand, most modern “company charges” over personal property (not land) are dealt with under the PPSA, and recorded on the PPSR.

This is important because the terminology can be confusing:

• People still say “company charge” as a general term.
• But legally, in many cases, what they mean is a security interest under the PPSA (or, for land, a separate form of security like a mortgage).
• The PPSR is the public register where PPSA security interests over personal property are recorded.

What Is “Personal Property” For PPSA Purposes?

Under the PPSA, “personal property” is basically most business assets other than land. This can include:

• equipment and machinery
• vehicles
• stock/inventory
• accounts receivable (money customers owe you)
• some IP-related rights (depending on structure and documentation)
• proceeds (for example, insurance payouts or sale proceeds of secured assets)

So if your company grants security over its “present and after-acquired property” (often called “all assets”), that’s usually a security interest that should be addressed under the PPSA/PPSR framework.

Why Registration Matters (Priority Rules)

A big reason the PPSR exists is to set clear priority rules between creditors.

If two parties both claim security over the same asset, the one with the better “priority” generally wins. Priority often depends on things like:

• whether the security interest is registered on the PPSR;
• when it was registered (earlier registrations often rank ahead); and
• whether it’s a special category like a purchase money security interest (PMSI).

This is why, if you’re providing credit or lending to a business, you generally don’t want to rely on a handshake or a clause hidden in an invoice - you want properly drafted documents and the right registration steps taken.

It’s also why, if you’re the business giving the security, you need to understand what you’re signing and how it could affect future funding.

Common Types Of Company Charges And Security Interests

You’ll often hear different labels used in New Zealand business finance documents. The concepts can overlap, but here are common types of company charge/security arrangements to know about.

All-Assets Security (General Security Agreement)

One of the most common forms of company charge is an “all-assets” security interest. This is often documented as a general security arrangement (sometimes described as covering “all present and after-acquired property”).

In plain terms: the secured party may have security over a wide range of the company’s assets - not just one piece of equipment.

This can be helpful for lenders, but for your business it can create limitations, for example:

• it may make it harder to give security to a new lender later (because the first lender already has security);
• it can affect business sale negotiations if a buyer wants assets “free and clear”; and
• it may require you to get consent before selling certain assets in the normal course of business (depending on the agreement terms).

Specific Security (Over A Particular Asset)

Sometimes, security is only over specific assets - like a vehicle, a piece of machinery, or a particular set of stock.

This is common where the funding is tied to that asset (like equipment finance). It can be easier to manage because it doesn’t “cover everything”, but you still need to be clear on:

• what asset is secured (description matters);
• what happens if you sell or replace it; and
• whether proceeds are also secured.

Supplier Security And Retention Of Title

If you buy goods from a supplier on credit terms, you might see clauses saying the supplier retains ownership until you’ve paid in full (often called “retention of title”).

Under the PPSA, these arrangements can still be treated like security interests. That means a supplier may need to register on the PPSR to properly protect themselves - and if you’re the buyer, it means your inventory might already be subject to someone else’s security interest.

This can come as a surprise for small businesses who assume “stock is stock”. In reality, your stock may be heavily tied up in secured arrangements depending on your supplier terms.

What Does A Company Charge Mean For Your Small Business?

A company charge isn’t automatically “bad”. In many cases, it’s a normal part of growing a business - it helps you access finance, stock, and equipment you couldn’t otherwise afford upfront.

But it does change your risk profile, and you should understand the real-world impacts.

It Can Affect Your Ability To Raise Finance Later

Imagine your business is doing well and you want to expand - maybe you need a larger premises, more stock, or additional staff.

If you already granted an all-assets security to an earlier lender, a new lender may be reluctant (or may require complicated arrangements) because:

• they may rank behind the existing secured party; and
• there may be little “unsecured value” left to support new lending.

This is one reason it’s worth getting legal advice before signing security documents, even if the funding offer looks straightforward.

It Can Create Practical Restrictions In Your Day-To-Day Operations

Some security documents come with “negative pledge” type obligations (for example, not granting further security, not disposing of assets outside ordinary business, or providing regular reporting).

Even if these terms are reasonable, you want to understand them before they become a problem - like when you’re trying to refinance, sell assets, or restructure your business.

It Matters If Your Business Gets Into Financial Trouble

If the company can’t pay its debts when they fall due, secured parties may have enforcement rights (depending on the agreement and the PPSA rules).

It’s also important to keep in mind directors’ duties and the risks around reckless trading or incurring obligations the company can’t perform. If you’re worried about cashflow, it’s worth getting advice early - not after the situation has escalated.

It Can Affect A Business Sale Or Investment

Buyers and investors will usually ask whether the company has any security interests registered on the PPSR.

If you’re selling your business (or even just bringing in a new shareholder), security can influence the deal structure and the documents you’ll need - including consents, releases, or pay-outs at settlement.

This is also why it’s a good idea to keep your company records tidy, including governance documents like a Company Constitution and, where relevant, a Shareholders Agreement.

How To Check The PPSR (And What To Look For)

If you’re dealing with a potential customer, supplier, or business purchase, you may want to check whether there’s a registered security interest over their assets.

A PPSR search can give you useful information, including:

• whether there are security interests registered against a debtor (like a company);
• the secured party’s details;
• a description of the collateral; and
• the registration date and duration.

But there are a few practical points to keep in mind.

A PPSR Search Is Not The Whole Story

A PPSR search is a strong starting point, but it doesn’t replace proper legal due diligence. For example:

• the underlying security agreement might include obligations and restrictions that aren’t obvious from the register;
• some interests may be unregistered (which can still create risks, depending on context); and
• you may need to confirm whether the registration is accurate and properly describes the collateral.

If you’re buying a business, this is one of the reasons a thorough due diligence process is so valuable - it’s not just about checking registrations, but understanding the contracts and liabilities behind them. If you’re going down that path, documents like an Asset Sale Agreement (or a share sale agreement) and careful settlement steps matter a lot.

If You’re Granting Security, Read The Documents Before You Sign

When you’re the one granting the company charge, it’s easy to treat the security documents as “standard forms”.

But small details can have big consequences - like whether the security extends to after-acquired property, whether it covers proceeds, and what enforcement rights apply if there’s a default.

If you’re signing documents as part of a broader deal (for example, a supply arrangement or services contract), make sure your core contract terms are also clear. A well-drafted Service Agreement or Supply Agreement can help reduce disputes that lead to payment issues in the first place.

What Legal Documents And Steps Should You Have In Place?

Whether you’re giving a company charge (as the borrower/buyer) or taking a company charge (as the lender/supplier), it’s worth thinking about the legal foundations early.

Here are the main pieces to get right.

1. A Clear Written Agreement

Under the PPSA, your security interest needs to be supported by a properly documented arrangement. Depending on the situation, this could be a standalone security agreement or security clauses embedded in other contracts.

The agreement should clearly cover:

• who the parties are (and the correct legal names);
• what obligations are secured (loan repayment, payment for goods, performance obligations, etc.);
• what collateral is covered (specific assets vs all assets);
• default events and enforcement rights; and
• any operational restrictions (like disposal of secured assets).

This is one area where DIY templates can be risky - if the description of collateral is unclear, or the agreement isn’t consistent with the PPSA requirements, the security might be harder to enforce.

2. PPSR Registration (When Appropriate)

Registration is often key to protecting priority. If you’re a lender or supplier, not registering can mean you lose priority to someone else who registers first - even if your agreement existed earlier.

If you’re the business granting security, you should still be aware of what’s being registered against your company and how that could affect future finance or a sale.

3. Privacy And Data Handling (If You’re Collecting Information)

Security arrangements and finance often involve collecting personal information (for example, director details, guarantor information, credit checks, or customer account information). If you’re collecting personal information in your business, the Privacy Act 2020 applies.

Having a Privacy Policy (and using it properly) is one practical way to show you’re taking those obligations seriously.

4. Strong Business Structures And Governance

If you’re growing and dealing with funding, partners, or investors, it’s worth checking that your internal documents support those next steps.

Depending on your structure, that may mean having:

• a clear constitution and shareholder rules;
• decision-making processes for taking on finance or granting security; and
• clear separation between personal and company obligations (where possible).

These details can really matter if a dispute arises later about who had authority to sign, or whether certain approvals were needed.

Key Takeaways

• A company charge is a way for your business to give security over assets, commonly used for loans, equipment finance, and supplier credit arrangements.
• In New Zealand, many “company charges” over personal property are treated as security interests under the Personal Property Securities Act 1999 (PPSA) and are recorded on the PPSR.
• PPSR registration and timing can determine priority, which affects who gets paid first if the company defaults or becomes insolvent.
• Company charges can impact your business’s ability to raise new finance, sell the business, or restructure - so it’s worth understanding what you’re agreeing to before signing.
• A PPSR search is a helpful due diligence step, but it doesn’t replace reviewing the underlying contracts and the broader legal risks in the deal.
• Well-drafted contracts and clear governance documents help you manage risk from day one, particularly as your business grows and takes on funding.

If you’d like help reviewing a finance or security document, or you’re not sure what a company charge means for your specific situation, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.