Corporations (Stay on Enforcing Certain Rights) Declaration 2018

The Declaration operates through a small number of interrelated legal concepts. Understanding those concepts is necessary to apply the instrument.

Specified person. The term "specified person" is central. It is defined to mean "the body, corporation or company the subject of subsection 415D(1), 434J(1), 451E(1) or 454N(1) of the Act (as applicable)" (s 4). The Declaration therefore applies only in contexts where one of those Corporations Act subsections applies to a particular entity. The instrument does not itself redefine those Corporations Act provisions; it declares which kinds of rights are excluded from their application where the specified person is the subject.

Financing arrangement. The Declaration adopts a deliberately broad definition of "financing arrangement" that captures both generic and common forms of commercial finance. It includes "any form of financial accommodation" and a non-exhaustive list of commonly used facility types (s 4). This breadth means many common contractual arrangements used to provide liquidity, credit, guarantees or performance security are within scope for several of the rights listed in s 5.

Standstill or forbearance arrangement. The instrument recognises standstill or forbearance arrangements as separate constructs: any contract that suspends or restricts enforcement of rights under another agreement (s 4). Section 5 expressly preserves termination rights under such arrangements (s 5(4)(c)).

Catalogue of preserved rights. Section 5(4) lists the kinds of rights that are declared not to be subject to the cited subsections of the Corporations Act. Those rights are expressed in commercial terms and include, among others:

• changing the basis or rate by which an amount under a financing arrangement, or a related guarantee or security, is calculated (s 5(4)(a));
• indemnities for costs and liabilities incurred in preserving or enforcing rights (s 5(4)(b));
• termination rights under standstill/forbearance arrangements (s 5(4)(c));
• changing payment priority (s 5(4)(d));
• set‑off, combination of accounts, netting and related enforcement rights (s 5(4)(e)-(g));
• rights to assign, novate or otherwise transfer rights or obligations (s 5(4)(h));
• rights to change the nature of security, for example converting circulating security to non‑circulating, floating to fixed charge, transferring accounts or chattel paper to a secured party, or restricting grantor dealings (s 5(4)(i));
• rights to perform, delegate performance or enforce rights by or for the specified person (s 5(4)(j));
• possessory security enforcement rights where specified Corporations Act paragraphs are satisfied (s 5(4)(k)-(l)).

Netting and acceleration. The instrument makes explicit that rights to accelerate payment dates, to convert or exchange currencies, and to crystallise security are included within the rights declared in paragraph 5(4) (the Note after s 5(4)(g)). It also clarifies that several enforcement rights may be exercised regardless of whether amounts are currently due for payment (s 5(4)(g)).

Interaction with the Personal Property Securities Act. Paragraph 5(5) ties terminology in paragraph 5(4)(i) back to the meanings given in the Personal Property Securities Act 2009, so terms such as "circulating security interest", "floating charge", "accounts" and "chattel paper" should be read with PPSA definitions where used in the Declaration.

Controller appointment exception. Section 6 preserves, in defined circumstances, a right to appoint a controller of property of the specified person. The declared exception applies only where the right is to be enforced by a person with a security interest and either a controller has been appointed or a right to appoint a controller has been enforced (s 6(4)), or where substantially all of the specified person’s property is subject to a security interest and the enforcing person is the relevant security holder (s 6(5)).

Substitution of references. The Declaration adjusts cross‑references to certain paragraphs of the Corporations Act so that where those paragraphs refer to "company", they are to be read as referring to the "specified person" for the purposes of the relevant paragraph in s 5 (s 5(6)-(7)).

No standalone duties, penalties or enforcement. The instrument is declaratory in character. It does not itself impose duties on third parties, nor does it contain penalty provisions. It effects how certain rights are treated under the Corporations Act by excluding them from the scope of the listed subsections (s 5 and s 6), and references existing statutory concepts and definitions where appropriate.

The Declaration affects a narrow but commercially significant set of actors identified by reference to their relationship with a "specified person" and by the commercial rights they hold or seek to exercise. The instrument’s definitions and declared rights make clear the classes of actors and commercial arrangements that are in scope.

Specified person. The primary focus is the "specified person", defined as the body, corporation or company that is the subject of subsections 415D(1), 434J(1), 451E(1) or 454N(1) of the Corporations Act (s 4). The Declaration only operates where those subsections apply to an entity, therefore entities that are the subject of those subsections will be directly affected by the instrument to the extent their counter‑parties claim or exercise any of the declared rights.

Secured creditors and holders of security interests. Many of the declared rights are rights commonly held by secured creditors: rights to change payment priority (s 5(4)(d)); set‑off and combination rights (s 5(4)(e)); netting and net balance rights (s 5(4)(f)); enforcement of possessory and other security interests (s 5(4)(k)-(l)); rights to convert circulating to non‑circulating security or floating charge to fixed charge or to transfer accounts or chattel paper to a secured party (s 5(4)(i)). Holders of security interests will therefore be affected when they contemplate enforcing those rights against a specified person.

Lenders and financiers. The instrument explicitly encompasses financing arrangements (s 4). The list in s 5(4)(a)-(j) includes rights typical in loan documentation: rate or basis changes (s 5(4)(a)); indemnities for enforcement costs (s 5(4)(b)); acceleration and currency conversion (note to s 5(4)(g)); assignment and novation rights (s 5(4)(h)); and enforcement powers (s 5(4)(j)). Entities providing financial accommodation, and their advisers, will therefore be affected by how these rights are carved out from the identified Corporations Act subsections.

Guarantors and indemnifiers. The Declaration covers guarantees, indemnities and related security that are "related to a financing arrangement" (s 5(4)(a) and (b)). Those who provide guarantees or indemnities should note that rights to enforce, and to recover indemnity costs and charges, are explicitly listed (s 5(4)(b)).

Participants in workout, standstill and forbearance arrangements. The instrument preserves termination rights under standstill or forbearance arrangements (s 5(4)(c)), and defines "standstill or forbearance arrangement" as any contract that suspends or restricts enforcement of rights (s 4). Parties negotiating or party to such arrangements will be affected because termination rights are declared non‑subject to the cited Corporations Act subsections.

Parties using netting, set‑off, and account‑combination mechanisms. The Declaration preserves set‑off, combination of accounts and netting rights (s 5(4)(e)-(f)) and the ability to enforce those rights even in circumstances where amounts may not yet be due (s 5(4)(g)). Banks, clearing houses, dealers and counterparties with contractual netting provisions are therefore within scope.

Assignees and counterparties seeking novation. Section 5(4)(h) preserves rights to assign, transfer or novate rights and obligations. Entities involved in assignments, sales of financial assets, novation of contracts, and structured finance transactions need to consider that those rights are treated as outside the application of the specified Corporations Act subsections.

Persons enforcing appointment of controllers. Section 6 deals with the separate issue of rights to appoint a controller of property of the specified person, and specifies that such rights are preserved in narrowly defined circumstances (s 6(1)-(5)). Security holders who might seek to appoint controllers, and advisers acting on their behalf, are therefore directly affected.

Legal and regulatory advisers. While not the direct subject of the instrument, lawyers, compliance officers, and advisers who draft, review or enforce financing and security documentation will need to interpret the instrument when advising on enforcement strategy, restructuring and documentation. The Declaration’s reliance on PPSA definitions for certain terms (s 5(5)) also pulls in advisers familiar with PPSA concepts.

Absent classes. The Declaration does not, on its face, purport to change substantive rights that are not listed. It does not create a new duty for creditors to enforce these rights, and does not itself change the internal rights of a specified person except insofar as external third parties wish to exercise the listed rights. The instrument is therefore targeted at the external exercise of particular creditor and counterparty rights in relation to a specified person.

The Declaration is declaratory and primarily concerns which rights are excluded from the operation of particular subsections of the Corporations Act. It therefore preserves certain creditor and counterparty rights rather than imposing new duties. The relevant duties and preserved rights are set out by reference to the sections.

Preserved rights catalogued in s 5. Section 5(4) enumerates the kinds of rights that are declared not to be subject to subsections 415D(1), 434J(1), 451E(1) and 454N(1) of the Corporations Act (s 5(1)-(3A)). The preserved rights can be grouped by commercial function:

• Pricing and adjustment rights: the right to change the basis, including by applying a different rate, for calculating amounts under a financing arrangement or a guarantee/indemnity/security related to a financing arrangement (s 5(4)(a)). This preserves contractual rate adjustment or default rate mechanisms.
• Indemnity and cost recovery rights: a right to payment by way of indemnity in respect of liabilities or losses arising from preserving or enforcing rights, and a right to recover charges and expenses incurred in preserving or enforcing rights (s 5(4)(b)).
• Standstill arrangement termination: termination rights under a standstill or forbearance arrangement regardless of whether the arrangement suspends, preserves or modifies the underlying rights (s 5(4)(c)).
• Priority and distribution rights: rights to change the priority or order of payment, distribution or receipt under a contract or arrangement (s 5(4)(d)).
• Set‑off, netting and account combination: rights of set‑off or combination of accounts, rights to net balances or other amounts, and the right to enforce those netting or set‑off rights (s 5(4)(e)-(g)). The instrument expressly contemplates acceleration, currency conversion and security crystallisation as included subtypes (note following s 5(4)(g)).
• Transfer and novation rights: rights to assign, transfer or novate rights and obligations (s 5(4)(h)).
• Security alteration and enforcement: rights to convert circulating security to non‑circulating security, to operate a floating charge as a fixed charge, to transfer accounts or chattel paper to a secured party, and to restrict a grantor from dealing with property (s 5(4)(i)).
• Performance and enforcement delegation: rights of the specified person to perform obligations, to engage others to perform or to enforce rights, or to engage others to enforce rights (s 5(4)(j)).
• Possessory security enforcement: rights to enforce possessory security interests where specified paragraphs of the Corporations Act are satisfied, with the "company" reference taken as a reference to the specified person for the purposes of the Declaration (s 5(4)(k)-(l); s 5(6)-(7)).

Right to appoint a controller in specified circumstances. Section 6 declares that a right to appoint a controller of property of the specified person is a kind of right to which the identified Corporations Act subsections do not apply, but only in the circumstances set out in s 6(4) or s 6(5). Those circumstances require that the right is to be enforced by a person who has a security interest in or over the property of the specified person and either:

• a controller has been appointed or a right to appoint a controller has been enforced in relation to the specified person (s 6(4)(b)); or
• the whole, or substantially the whole, of the specified person’s property is subject to a security interest and enforcement is by the person who has that security interest (s 6(5)(a)-(b)).

Duties implied by the Declaration. The Declaration does not, on its face, impose positive duties on creditors or the specified person. It does not create obligations to exercise the preserved rights. The instrument’s effect is to remove the application of certain Corporations Act subsections to the listed rights. Any duties that exist in practice when a party exercises the preserved rights derive from the underlying contractual documentation, the Corporations Act itself (outside the subsections excluded), the Personal Property Securities Act definitions (s 5(5)), and other applicable law.

Scope limits. Paragraph 5(5) makes clear that when applying paragraph 5(4)(i), words and expressions defined under the Personal Property Securities Act 2009 have the same meanings (s 5(5)); this confines certain preserved rights to the conceptual universe of the PPSA. Further, s 5(6)-(7) and s 6(4)-(5) place factual limits on when possessory security enforcement and controller appointment rights are preserved.

Practical rights management. For parties drafting or reviewing finance and security documentation, the Declaration signals that the enumerated rights will not be subject to the identified subsections of the Corporations Act in the situations where those subsections would otherwise apply. Parties should therefore be aware that contractual rights to accelerate, net, set‑off, change priority, assign, novate, crystallise security, restrict grantor dealing, recover indemnities and costs of enforcement and, in certain circumstances, appoint a controller, are preserved by the Declaration (s 5 and s 6).

The Declaration itself contains no penalty provisions and does not create an enforcement regime. Its operative effect is declaratory: it identifies kinds of rights that are declared not to be within the scope of certain subsections of the Corporations Act (s 5 and s 6). Consequently, the Declaration does not institute fines, criminal offences or civil penalties; it modifies the statutory landscape by exclusion only.

Where enforcement occurs. The practical enforcement of rights preserved by the Declaration will occur through the mechanisms that already exist in contract, security documentation and the wider statutory framework. For example, enforcement of security interests, netting or set‑off will be conducted under contractual terms, the Personal Property Securities Act 2009 where applicable (s 5(5)) and the Corporations Act in areas not expressly excluded by the Declaration. The Declaration does not provide procedural enforcement routes; it preserves the substantive right to enforce by declaring that specified Corporations Act subsections do not apply to those rights.

Cross‑references to Corporations Act paragraphs. Sections 5(4)(k) and 5(4)(l) preserve the right to enforce possessory security interests in circumstances where certain paragraphs of the Corporations Act are satisfied. Those paragraphs are identified as 440JA(b), (c) and (d) and 453X(b), (c) and (d) respectively (s 5(4)(k)-(l)). Sections 5(6) and 5(7) clarify that, for the purposes of the Declaration, references to "company" in those paragraphs are to be taken as references to the "specified person" (s 5(6)-(7)). Any enforcement under those paragraphs would therefore proceed according to the requirements of those Corporations Act provisions, as read with the substitution in s 5(6)-(7). The Declaration does not alter the procedural or substantive prerequisites contained in those Corporations Act paragraphs; it merely preserves the right to enforce such possessory security interests by declaring them not to be subject to the listed subsections.

No express administrative enforcement. The Declaration is made under statutory authority recorded at s 3. It is an instrument exercising the rule‑making or declaratory power in the Corporations Act. It does not create an independent administrative enforcement function or vest new powers in regulators or administrators. Any regulatory or administrative consequences arising from enforcement actions will be those that exist under the Corporations Act, the PPSA and other applicable law.

Interaction with other enforcement mechanisms. Because the Declaration ties certain rights to PPSA definitions (s 5(5)) and incorporates references to particular Corporations Act paragraphs (s 5(6)-(7)), practical enforcement will often be a multi‑statute exercise. For example, enforcing a right that involves crystallising a security interest, transferring chattel paper or relying on possessory security may require attention to PPSA registration, perfection and priority rules, as well as procedural conditions in the Corporations Act paragraphs referenced. The Declaration does not remove those other requirements; it preserves the underlying substantive rights against the operation of the specific Act subsections identified.

Record‑keeping and proof. The Declaration does not prescribe record‑keeping or evidentiary standards for enforcement. Parties relying on these preserved rights will need to ensure compliance with the evidentiary, registration and procedural requirements in the relevant statutes (for example the PPSA and the rest of the Corporations Act) and in their contractual documentation. The Declaration does not change those obligations.

The Declaration is constructed to operate in tandem with existing statutory regimes. Its text makes explicit cross‑references to the Corporations Act 2001 itself and to definitions taken from the Personal Property Securities Act 2009. The instrument therefore sits within, and modifies by exclusion, a broader legal architecture.

Primary interaction: Corporations Act 2001. The Declaration is expressly made under the authority of subsections 415D(7), 434J(6), 451E(6) and 454N(6) of the Corporations Act (s 3). Its substantive effect is to declare that certain "kinds of rights" are "kinds of rights to which" subsections 415D(1), 434J(1), 451E(1) and 454N(1) of the Corporations Act do not apply (s 5(1)-(3A)). Therefore the Declaration modifies how those subsections operate in specified factual circumstances by excluding the listed rights from their application. The Declaration does not, and cannot within its terms, change the text of the Corporations Act; it operates as a statutory instrument that identifies exclusions under the delegated power.

Cross‑references to specific Corporations Act paragraphs. The Declaration explicitly preserves enforcement of possessory security interests in circumstances where paragraphs 440JA(b), (c) and (d), and 453X(b), (c) and (d) of the Corporations Act are satisfied (s 5(4)(k)-(l)). It further directs that for the purposes of paragraph 5(4)(k) and 5(4)(l) the reference to "company" in the specified Corporations Act paragraphs is to be read as a reference to the "specified person" (s 5(6)-(7)). This is an instrument‑level clarification of how those Corporations Act provisions are to be read in the particular context covered by the Declaration.

Incorporation of PPSA definitions. Paragraph 5(5) states that words and expressions defined for the purposes of the Personal Property Securities Act 2009 have the same meanings when used in paragraph 5(4)(i) of the Declaration. That clause links the Declaration to PPSA conceptual categories including circulating security interest, accounts, and chattel paper. As a result, practical questions of perfection, priority and registration under the PPSA will be relevant when applying the rights preserved by paragraph 5(4)(i).

No substitution or alteration of PPSA or Corporations Act obligations other than exclusions. The Declaration does not amend the PPSA or the Corporations Act text. It does not alter PPSA registrability, perfection requirements, or priority rules. Nor does it change other Corporations Act obligations outside the subsections expressly referred to. The instrument operates by declaring certain kinds of rights to be outside the scope of particular statutory subsections; it does not otherwise rewrite existing legislation.

Interplay with contractual arrangements. The preserved rights are primarily contractual or property rights. Therefore the Declaration interacts with private law by clarifying that where a specified Corporations Act subsection would otherwise apply, the listed rights are excluded. The effect on contracts will depend on the existing contractual language, whether enforcement triggers conditions under the Corporations Act or the PPSA, and whether other statutory provisions impose constraints that are unaffected by the Declaration.

Procedural and evidentiary interactions. Because the Declaration imports PPSA terminology for parts of paragraph 5(4), enforcing certain preserved rights may require compliance with PPSA procedural rules, such as registration for perfection and proof of security interest. The Declaration does not relieve parties of those requirements; it preserves substantive rights while leaving existing procedural statutory frameworks intact.

Limits to interaction claims. The Declaration does not override other statutory limitations or substitute its own enforcement procedures. Any action taken under a preserved right will remain subject to other applicable law and to the conditions specified in the Declaration itself (for example the circumstances in s 6 for the appointment of a controller). Practitioners must therefore treat the Declaration as a targeted exclusion rather than a comprehensive rewrite of the statutory or regulatory framework.

The text of the Declaration as provided contains the instrument title, its authority clause and the substantive provisions. It identifies itself as the Corporations (Stay on Enforcing Certain Rights) Declaration 2018 (s 1). The instrument text as supplied contains no internal amendment provisions and makes no mention of prior instruments or subsequent amendments.

Key points about amendment history based on the instrument text.

• Original instrument identification: The Declaration names itself as the Corporations (Stay on Enforcing Certain Rights) Declaration 2018 (s 1).
• Authority for making and amending: The instrument is made under specific subsections of the Corporations Act 2001 (s 3). Any legislative power to amend such a declaration will lie in the enabling subsections of the Corporations Act rather than in the Declaration itself. The Declaration does not include an express schedule of amendments or transitional provisions.
• No amending schedules contained: The document contains no schedule providing commencement dates beyond its title, no textual amendment notes, and no later modification clauses embedded in the text provided.
• Absence of repeal or supersession language: There is no paragraph that purports to repeal earlier similar instruments or to be temporary, nor is there a sunset provision in the text supplied. The instrument therefore appears, from the material provided, to be the operative declaration as issued in 2018.
• No notation of legislative history within the instrument: The Declaration does not include an explanatory memorandum, second reading speech extract or other commentary in the text provided. Any legislative history (for example, reasons for issuing, consultations, or policy statements) is not contained in the instrument itself.

For practical purposes, when advising clients or preparing documentation, one should not rely solely on the instrument text to determine whether the Declaration has since been amended or repealed. The instrument as supplied contains no record of amendments. Any subsequent amendments, revocations or replacement instruments would appear in the official Federal Register of Legislation or the consolidated Corporations Act instrument registers. The Declaration itself does not record an internal amendment history or transitional arrangements.

The Declaration text supplied contains no references to litigation or case law. It does not cite, rely upon, or record judicial decisions that interpret its provisions. The instrument does not list any proceedings, and no judicial history is contained in the text provided.

What the text does mean for litigation risk. Although the Declaration does not record case law, its legal effect , to declare specific rights not to be subject to particular subsections of the Corporations Act , is the sort of instrument that may later be the subject of judicial interpretation if disputes arise about its scope, its interaction with other Corporations Act provisions, PPSA concepts, or the factual circumstances required for some exclusions. Specific tension points where litigation might later arise (not recorded in the instrument, merely logical points of interpretive dispute) include:

• The precise definition and application of "specified person", since the instrument ties application to the entity that is the subject of certain Corporations Act subsections (s 4).
• Whether a particular contractual provision falls within one of the declared kinds of rights in s 5(4), for example whether a clause changing the basis for calculating an amount under a financing arrangement is captured by s 5(4)(a).
• The meaning and scope of "standstill or forbearance arrangement" where contractual arrangements use different terminology (s 4; s 5(4)(c)).
• The application of PPSA definitions to paragraph 5(4)(i) where the nature of the security interest , circulating versus non‑circulating, floating versus fixed , is contested (s 5(5)).
• The facts required to satisfy the circumstances in s 6(4) or s 6(5) where a party seeks to rely on the preserved right to appoint a controller.

Because the Declaration does not itself include procedural or remedial language, disputes are likely to arise in other forums: contested enforcement actions, priority disputes under the PPSA, or litigation about whether the excluded Corporations Act subsections nonetheless constrain conduct in other ways. The text supplied does not provide examples of cases or decisions on these points.

Practical implication for advisers. In the absence of recorded litigation history in the instrument itself, advisers and practitioners should expect that novel or borderline factual situations will require careful statutory interpretation and may ultimately be litigated if parties cannot agree. The Declaration’s cross‑references to PPSA meanings and to particular Corporations Act paragraphs indicate areas where courts may be asked to reconcile multiple statutory regimes and fine‑grained factual thresholds.

The Declaration is short and targeted, but there are a number of drafting and practical features that can produce pitfalls for practitioners. The following points are drawn directly from the instrument text and the mechanical consequences of its clauses.

1. Application depends on being the "specified person". The Declaration operates only in relation to "the body, corporation or company the subject of subsection 415D(1), 434J(1), 451E(1) or 454N(1) of the Act (as applicable)" (s 4). Before relying on the exclusions in s 5 or s 6, a party must be certain that the entity in question is in fact the subject of one of those Corporations Act subsections. The Declaration does not itself define when an entity is the subject of those subsections.

2. Broad definition of "financing arrangement" may capture unexpected contracts. "Financing arrangement" is defined to include "any form of financial accommodation" as well as a list of arrangements such as leases, bills, guarantees and letters of credit (s 4). Countersample or ancillary commercial arrangements might fall within this broad definition, bringing otherwise peripheral clauses within the scope of s 5(4)(a) and related paragraphs.

3. Standstill and forbearance termination rights are preserved irrespective of the arrangement’s effect on other rights. Section 5(4)(c) preserves termination rights under standstill or forbearance arrangements "whether or not the standstill or forbearance arrangement suspends, preserves or modifies the right under the other contract, agreement or arrangement to which it applies". Parties relying on such termination rights should therefore check the precise drafting, because the preservation is broad but confined to agreements that meet the Declaration’s definition of standstill or forbearance (s 4).

4. Enforcement of netting, set‑off and related rights may be possible before amounts are due. Paragraph 5(4)(g) preserves the right to take action to enforce set‑off, netting or certain other rights "whether or not an amount is due for payment, will or may become due for payment, or is unpaid". This means parties may be able to exercise netting and similar rights on events of default or other triggers even where payments are not immediately due, but that power is carved out only to the extent those rights are among the declared kinds of rights.

5. PPSA definitions apply to certain security transformations. Paragraph 5(5) makes PPSA definitions applicable for paragraph 5(4)(i). Practitioners must therefore be comfortable with PPSA meanings (for instance, what constitutes circulating security, accounts, chattel paper) because the Declaration relies on those statutory definitions. Mistaking the PPSA meanings could lead to misjudging whether a right is preserved.

6. Narrow conditions for controller appointment preservation. Section 6 preserves a right to appoint a controller only in two sets of facts (s 6(4) and s 6(5)). The first requires that the right be enforced by a person who has a security interest in property of the specified person, and that in relation to that property a controller has been appointed or a right to appoint a controller has been enforced (s 6(4)). The second applies where substantially all of the specified person’s property is subject to a security interest and enforcement is by the person holding that security (s 6(5)). These factual predicates are narrow; misreading them can lead to invalid enforcement steps.

7. Cross‑references substitute "specified person" for "company". Sections 5(6) and 5(7) instruct that references to "company" in paragraphs 440JA(b) and 453X(b) respectively are to be read as references to the "specified person" for the purposes of paragraphs 5(4)(k) and 5(4)(l). This substitution is limited to the context of those paragraphs and does not automatically re‑write the Corporations Act elsewhere. It is therefore easy to over‑generalise from the substitution; practitioners should confine that substitution to the specific paragraphs identified.

8. No procedural or evidentiary guidance in the instrument. The Declaration does not set out procedural steps, timelines, or evidence required to exercise the preserved rights. Those matters will be governed by contract, the PPSA and the rest of the Corporations Act, and misreading the Declaration as providing procedural authority would be a mistake.

9. Drafting anomalies in the instrument text. The instrument repeats subsection numbering (two subsections numbered (3) in s 5, followed by a (3A)). While likely typographical, the repetition could cause confusion if not read carefully; practitioners should read the substance rather than rely on the numbering alone.

10. The Declaration does not create new rights where none exist. The instrument preserves and declares that certain kinds of rights are not subject to specified subsections of the Corporations Act. It does not create rights where parties lack them under contract or other statute. For example, if a contract lacks a netting clause, the Declaration does not grant one; it merely declares that certain listed kinds of rights, where they exist, are excluded from the application of the cited subsections.

11. Overreliance on the Declaration as a shield. Because the Declaration only excludes the listed rights from application of particular subsections, it does not automatically immunise enforcement conduct from other statutory limitations, equitable duties, injunctive relief, or other avenues of court oversight. The instrument contains no express defence to other remedies that may be available under the law.

12. Ambiguities about when a right is "to enforce" versus a right "to take action to enforce". Paragraph 5(4)(g) and the Note introduce subcategories of enforcement rights; factual disputes about whether a step constitutes "taking action to enforce" a preserved right may arise and require careful analysis in each case.

In practice, the principal "gotcha" is misapplying the Declaration as a blanket authorisation to take enforcement action. Each preserved right is subject to the definitions, the factual predicates (notably under s 6), and to other statutory and contractual constraints that the Declaration does not change.

The Declaration itself does not impose affirmative compliance obligations, but it does change the statutory landscape for enforcement rights in relation to a specified person. The following checklist and steps are scoped narrowly to what the instrument requires or presupposes, and are grounded in its text.

1. Confirm whether the entity is a "specified person". Before relying on any of the exclusions in s 5 or s 6, determine whether the entity in question is the subject of subsection 415D(1), 434J(1), 451E(1) or 454N(1) of the Corporations Act (s 4). The Declaration applies only where one of those subsections applies to the entity. Do not assume applicability.

2. Map contractual rights to the Declaration’s categories. Review your financing, security and ancillary documents and identify clauses that correspond to the categories in s 5(4): rate changes (s 5(4)(a)); indemnities and enforcement costs (s 5(4)(b)); standstill termination (s 5(4)(c)); priority changes (s 5(4)(d)); set‑off/netting/account combination (s 5(4)(e)-(f)); assignment/novation (s 5(4)(h)); security conversion or restrictions on grantor dealings (s 5(4)(i)); delegation and enforcement powers (s 5(4)(j)); and possessory security enforcement clauses where applicable (s 5(4)(k)-(l)). Classify each relevant provision against the corresponding paragraph so you can determine whether the Declaration preserves that right.

3. Check PPSA definitions where paragraph 5(4)(i) is claimed. If you intend to rely on a right under paragraph 5(4)(i) (for example to convert a circulating security into a non‑circulating security, to treat a floating charge as fixed, or to transfer accounts/chattel paper), apply the definitions from the Personal Property Securities Act 2009 as directed by s 5(5). Ensure your factual circumstances satisfy PPSA definitions of circulating security interest, accounts and chattel paper before assuming the right is preserved by the Declaration.

4. For controller appointment rights, verify the factual preconditions in s 6. If you intend to rely on the preserved right to appoint a controller under s 6, confirm that either (a) the enforcing person has a security interest and a controller has already been appointed or a right to appoint a controller has been enforced in relation to the specified person (s 6(4)(a)-(b)); or (b) substantially the whole of the specified person’s property is subject to a security interest and enforcement is by the security holder (s 6(5)(a)-(b)). The Declaration does not preserve a general right to appoint a controller outside those factual predicates.

5. Consider procedural and statutory requirements beyond the Declaration. The Declaration does not remove requirements under other statutes or contractual conditions. For example, enforcement steps that implicate the PPSA may require registration to perfect a security interest, steps taken against property may need compliance with possession or sale procedures, and other Corporations Act provisions may impose duties or remedies. Ensure you satisfy registration, notice, traceability and procedural steps required elsewhere.

6. Draft enforcement notices and actions with clear reference to preserved rights. When taking enforcement action, frame the legal basis in terms of the specific preserved right under s 5 or s 6, and ensure supporting documentation demonstrates the factual predicates required by the Declaration. For netting and set‑off actions preserved by paragraph 5(4)(e)-(g), clearly identify triggering events and the contractual basis for netting; for rate adjustments preserved by s 5(4)(a), identify the contractual clause and calculation method.

7. Maintain contemporaneous evidence demonstrating eligibility. Because the Declaration’s preservation is conditional in some respects, keep contemporaneous records that show (a) the entity is a specified person; (b) the enforcing party holds the relevant security interest; (c) any relevant controller appointment or enforcement step has occurred; and (d) PPSA‑relevant facts for security transformations. This reduces the risk of dispute about whether the Declaration’s conditions are satisfied.

8. Check documentation for incompatible clauses. Some finance documents contain cross‑references to statutory stays or moratoria. If a clause purports to operate only subject to certain Corporations Act stays, ensure the drafting aligns with the Declaration’s exclusions. Where documentation presumes that a stay in a specified subsection will apply to certain rights, update or clarify drafting to reflect that the Declaration excludes particular rights from the identified subsections.

9. Seek targeted legal advice for borderline cases. Where uncertainty exists about whether a contractual provision falls within one of the declared categories, or whether a factual threshold (such as "substantially the whole" in s 6(5)(a)) is met, obtain legal advice. The Declaration’s textual limits make fact‑sensitive legal analysis necessary.

10. Do not rely on the Declaration as a substitute for good procedural practice. Even where a right is preserved, follow established good practice: give clear notices, allow for any contractual cure periods, account for other statutory obligations (for example insolvency or equitable duties), and document steps carefully in case of subsequent dispute.

11. Be cautious about timing and sequencing of enforcement. The Declaration preserves rights that may be exercisable before amounts are due (s 5(4)(g)). However, exercising such rights without observing contractual or statutory preconditions may create grounds for litigation. Assess whether immediate exercise is commercially necessary and legally supportable.

12. Incorporate Declaration awareness into internal compliance and deal checklists. Credit, risk and legal teams should add the Declaration’s categories to routine checklists used in workouts, forfeiture scenarios, asset sales, security enforcement and cross‑border remedies, ensuring that the team considers s 5 and s 6 when a relevant trigger occurs.

Following these steps will help parties and advisers to deploy the Declaration’s preserved rights within the legal and contractual architecture that continues to govern enforcement, while avoiding reliance on the Declaration in circumstances where it does not apply or where additional statutory or contractual requirements constrain action.