In the UK, the current rules on registering security at Companies House have only been in place since October 2009. But their days are numbered. New regulations coming into force on 1 October 2011 will largely dismantle the current regime for registering security created by overseas companies. The UK government also proposes major changes to the rules on registering security created by UK companies, currently scheduled for implementation on 1 October 2012.
Security Granted by Overseas Companies
On 1 October 2011, The Overseas Companies (Execution of Documents and Registration of Charges) (Amendment) Regulations 2011 come into force. As a result, no security granted by overseas companies on or after that date will be registrable at Companies House.
The current rules for registering security granted by overseas companies are set out in The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009. It was hoped that the security registration rules in the 2009 Regulations would bring clarity and simplicity, in particular by bringing to an end 'Slavenburg' registrations, which had become widespread under the Companies Act 1985 registration rules.
However, the current rules have not worked particularly well. One of the key tests for registrability is that the overseas company must have a registered UK establishment when it grants the security. But it is not possible to determine conclusively that an overseas company does not have a registered UK establishment by searching the Companies House register. This is because an overseas company can register a UK establishment under a name different from its own. As a result, in some circumstances it has been impossible for a lender to be sure whether a charge in its favour from an overseas company is registrable at Companies House. This change will remove that uncertainty.
An overseas company with a registered UK establishment will still need to keep its own register of any of the following types of charge it has granted:
- charges over land in the United Kingdom;
- charges over ships, aircraft or intellectual property registered in the United Kingdom; and
- floating charges over assets in the United Kingdom.
It must also make that register, and copies of any documents referred to in it, available for inspection. However, if the overseas company fails to comply with this obligation, it does not affect the validity of the security granted.
Security Granted by UK Companies and LLPs
On 10 August 2011, the Department for Business, Innovation and Skills published on its website the government's latest proposals for revising the rules on registering security at Companies House created by UK companies and limited liability partnerships. The current rules are in Part 25 of the Companies Act 2006.
The proposals are still in consultation but, if implemented, would represent the biggest change in the Companies House registration regime for UK companies for decades. The proposed changes include:
- All charges and mortgages which UK companies and LLPs create will be registrable, subject to limited named exceptions (e.g. rent deposit deeds).
- There will no longer be a detailed registration form (like the current Form MG01). Instead, registration will involve submitting very basic details of the charge and a certified copy of the charge document. It will be possible to redact sensitive information in the charge document not relevant to the registration.
- It will be possible to submit documents for registration electronically.
The government expects to publish draft amending regulations in early 2012, and that the changes will come into force on 1 October the same year.