Does a general security agreement cover land?

Generally no. In New Zealand and Australia it operates under personal property securities legislation, which deals with assets other than land. A bank that wants security over land takes a mortgage registered on the title. An all-assets agreement can reach the company's goods, receivables, equipment and intangibles, and fixtures or crops can raise their own questions, so a lender lending against a site usually takes both documents.

Can a company sell its stock if there is a GSA over it?

Yes, in the ordinary course of business. A trading company has to keep selling, and the agreement and the statute allow for that: a buyer in the ordinary course generally takes free of the lender's interest, and the lender's claim moves to the proceeds. Selling outside the ordinary course, such as a sale of the whole business or a major piece of plant, usually needs the lender's consent and a release of the asset.

Does a GSA rank ahead of employees and the tax authority?

Not on every asset. In New Zealand certain employee and tax claims rank ahead of a general security interest over receivables and inventory. In Australia priority employee claims come ahead on circulating assets. In the UK preferential debts, including some taxes, come ahead on floating-charge assets. Over plant and other assets outside those categories, the secured lender generally stands first, subject to any purchase-money interest or earlier registration.

How do you remove a GSA from the PPSR?

When the debt is repaid and the security released, the secured party removes its registration. A borrower refinancing asks for this as part of completion, usually with a deed of release. Both the New Zealand and the Australian registers have a process for a debtor to demand removal of a registration that has no continuing basis. A registration left on the register after repayment can hold up a new lender until it is cleared.

// WORKED EXAMPLEWHAT THE DOCUMENT DOES

General Security Agreement: What the Bank Really Holds

A claim on everything, and a queue in front of it.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-09 · 6 MIN READ

// THE SHORT ANSWER

For a trading company in New Zealand or Australia, the bank's main security is usually one document reaching every asset the company owns or later acquires, apart from land. It decides little while the business trades. It matters on failure, when it lets the lender appoint a receiver and sets where the lender stands in the queue for the proceeds. Registration on the PPSR fixes most of that place, but a supplier or financier with a purchase-money interest and, on some assets, preferential creditors can stand ahead. A lender therefore values the queue, not the balance sheet.

BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// MAKE THE CALL

Issue 03 — Kauri Dairy Holdings. The patriarch is retiring. The bank hears about the succession plan from the accountant first. Your call first, then the senior banker's.

Read the file →

PART OF What Your Bank Holds as Security

// 01 — WHY A LENDER TAKES ONE DOCUMENT OVER EVERYTHING

A trading company's assets turn over constantly. Stock is bought and sold, invoices are raised and collected, plant is replaced. Security over a list of named assets would be out of date within a week. An all-assets agreement solves that by attaching to what the company owns now and what it acquires later, including the proceeds when an asset turns into cash. It gives the bank one place in the queue for the whole trading balance sheet and a single route to enforcement.

Land is outside it. The personal property securities statutes of New Zealand and Australia deal with personal property, so real estate needs a mortgage registered against the title. While the business trades, the agreement has little visible effect: the company goes on selling its stock, and a buyer in the ordinary course generally takes free of the bank's interest. The document earns its place on failure, when the lender can appoint a receiver to take control and sell.

// 02 — HOW IT ATTACHES, REGISTERS AND RANKS

Attachment agreement signed, value given, company has rights in the asset

Perfection financing statement registered on the PPSR

Priority earlier registration generally ranks first

Exception a purchase-money interest registered in time ranks ahead on those goods

Enforcement after default: receiver, sale, proceeds applied in the statutory order

The register records a claim; it does not create one. Attachment alone does not protect a lender against others, and perfection is the step that does. Registration also needs tending: in New Zealand a financing statement lasts up to five years unless renewed, and a wrong company detail can cost a lender its place.

The purchase-money exception is the one a bank meets most. A supplier who sold on credit and a financier who funded a machine can each rank ahead on those goods even though the bank registered years earlier, provided they registered within the short limits each country's statute sets. It reaches only the goods financed and their proceeds, so the all-assets interest stays first on everything else.

The UK has no personal property securities statute or register of that kind. There a debenture reaches much the same place through fixed and floating charges, and a charge needs to be delivered to the registrar at Companies House within 21 days of its creation, or it is void against a liquidator, an administrator and other creditors.

// 03 — THE EXAMPLE

A maker of commercial roller doors in New Zealand, constructed for this page like every figure in it, owes its bank US$4.5m under a general security agreement registered ahead of any other. The company fails and a receiver is appointed. A steel supplier has a registered purchase-money interest in the coil it delivered, and an equipment financier has one over a press brake.

Book Realised

Receivables 4.0 2.8

Stock 3.2 1.0

Plant 2.8 1.1

Total 10.0 4.9

Realised 4.9

Steel supplier, on its coil − 0.4

Equipment financier, on the press − 0.6

Receiver's costs − 0.5

Preferential claims, staff and tax − 0.6

Left for the bank 2.8

Bank owed 4.5, shortfall 4.5 − 2.8 = 1.7

Recovery 2.8 ÷ 4.5 = 62%

Book assets of US$10.0m produced US$4.9m, and the bank received US$2.8m. These realisations are the example's, and a different business would fall differently. Forced sale took the largest share: customers of a failed manufacturer dispute invoices, half-finished doors have few buyers, and plant goes to auction. The purchase-money holders took their goods' proceeds without regard to the bank's ranking. And preferential creditors took a further slice, because in New Zealand employee and certain tax claims rank ahead of a general security interest over receivables and inventory, though not ahead of a properly registered purchase-money interest.

The other markets arrive by different routes. In Australia a receiver must pay priority employee claims out of circulating assets ahead of the secured creditor. In the UK, assets under a floating charge bear preferential debts, which since December 2020 have included certain taxes collected by HMRC, and a ring-fenced share goes to unsecured creditors. In each, the part of the balance sheet that turns over is the part most exposed to claims in front of the lender.

// 04 — HOW IT DIFFERS FROM A DEBENTURE OR MORTGAGE

A specific security agreement covers a named asset and leaves the rest alone, and is how a financier protects the truck or machine it funded. A mortgage covers land. A debenture is the UK's all-assets instrument: it usually combines fixed charges over assets the lender controls with a floating charge over the rest, and that fixed or floating label affects who is paid first. New Zealand's and Australia's statutes moved the priority question to registration and to the nature of the asset.

A general security agreement also needs a partner. It ranks the bank; a negative pledge promises the company will not give security to anyone else. The first is the place in the queue, and the second is the promise that the queue will stay short.

DEFINED IN ONE PARAGRAPH → · WHAT YOUR BANK HOLDS AS SECURITY → · THE PPSR →

// 05 — WHERE IT DECIDES A FILE

Before it lends, a bank searches the register, and what is already there shapes the deal. A registration by another lender needs releasing, or a deed of priority to settle who ranks where. A long list of supplier and equipment registrations says how much of the balance sheet may be spoken for. The search is repeated at review, because purchase-money interests can be added after the bank has lent without its knowing.

The valuation question comes next. A lender discounts each class of asset for what it would fetch in a failure and then deducts those ahead of it, and the answer feeds the view of the second way out, which is what the agreement is for. It does not make a weak cash flow strong. At the other end of the relationship, a refinancing needs the old lender's release and removal of its registration before the new lender stands first, so the discharge belongs on the completion list.

LVR, SECURITY AND COLLATERAL → · ISSUE 04 · THE WORKING CAPITAL FILE →

// SOURCES

The documents the statements on this page rest on. Each was opened and checked when cited.

New Zealand Companies Office, Personal Property Securities Register — glossary of terms — Describes financing statements, their five-year life, attachment and perfection, and the super-priority of a purchase-money security interest — section 02.
UK Companies Act 2006, section 859A — Sets the 21-day period for delivering a charge for registration — section 02.
HMRC, HMRC as a preferential creditor — Confirms VAT, PAYE and employee NICs rank ahead of floating charge holders in insolvencies beginning after 1 December 2020 — section 03.

// QUESTIONS PEOPLE ASK

Does a general security agreement cover land?: Generally no. In New Zealand and Australia it operates under personal property securities legislation, which deals with assets other than land. A bank that wants security over land takes a mortgage registered on the title. An all-assets agreement can reach the company's goods, receivables, equipment and intangibles, and fixtures or crops can raise their own questions, so a lender lending against a site usually takes both documents.
Can a company sell its stock if there is a GSA over it?: Yes, in the ordinary course of business. A trading company has to keep selling, and the agreement and the statute allow for that: a buyer in the ordinary course generally takes free of the lender's interest, and the lender's claim moves to the proceeds. Selling outside the ordinary course, such as a sale of the whole business or a major piece of plant, usually needs the lender's consent and a release of the asset.
Does a GSA rank ahead of employees and the tax authority?: Not on every asset. In New Zealand certain employee and tax claims rank ahead of a general security interest over receivables and inventory. In Australia priority employee claims come ahead on circulating assets. In the UK preferential debts, including some taxes, come ahead on floating-charge assets. Over plant and other assets outside those categories, the secured lender generally stands first, subject to any purchase-money interest or earlier registration.
How do you remove a GSA from the PPSR?: When the debt is repaid and the security released, the secured party removes its registration. A borrower refinancing asks for this as part of completion, usually with a deed of release. Both the New Zealand and the Australian registers have a process for a debtor to demand removal of a registration that has no continuing basis. A registration left on the register after repayment can hold up a new lender until it is cleared.

// NEXT TO IT

// ON WHOSE DESK

The seats that read this term in an ordinary week. Each page says what the seat is for, who arrives in it, and the shape of the round it runs.

Credit sanctionerHolds delegated authority and signs — or declines — the lending the front line brings.
Legal counselAdvises the bank on what it can do, drafts and negotiates what it signs, and manages what goes wrong.
Lending operations officerTurns an approval into a working facility — documentation, security, drawdown, and the register that says what the bank actually holds.

THE IN-TRAY · ONE MINUTE

Make the call on one file.

A short file on the ground this page covers. Every option opens with how far it sits from a senior banker’s read.

THE FIRST QUESTION · THE LOAN · PROTECTION

A food manufacturer's loan is secured by a floating charge over its stock and debtors and a fixed charge over its factory.

Which security can shrink without anyone breaching anything?

7 MORE ON THE LOAN · PROTECTION →WHERE DO YOU READ FROM? THE PLACEMENT →

THE READING ROOMIN ONE PARAGRAPHGeneral security agreement (GSA) What is a general security agreement, and what does it give the bank?