Changes to the requirement for companies to keep a register of charges, to be introduced as part of the new regime for the registration of charges.
A new regime for the registration of company charges will come into force on 6 April 2013 on the implementation of The Companies Act 2006 (Amendment of Part 25) Regulations 2013 (SI 2013/600) which amend the existing Companies Act 2006 provisions. The main objectives of the new regime are:
- to introduce a single scheme for the registration of charges that applies to any company registered anywhere in the United Kingdom (‘UK’)1, irrespective of the location of the asset charged or the law used to create the security; and
- to provide for electronic filing of charges at Companies House, with the aim of reducing costs, in tandem with the existing regime for hard copy filing.
As part of the new system, Companies House will be introducing new forms and procedures for the registration of charges.
Will it still be necessary to keep a register of charges?
No. As part of the new regime, UK companies will no longer be required to keep a register of charges. They will, however, be required to keep copies of the following available for inspection:
- charge instruments2;
- any instrument amending a charge; and
- if any details relating to a charge which must be submitted to Companies House are not contained in the charge instrument itself, the other documents referred to in or otherwise incorporated into the charge.
The copy documents must be kept at the company’s registered office (or its single alternative inspection location). The company must notify Companies House where the documents are kept and of any change, unless they have at all times been kept at the company’s registered office.
The documents must be open to inspection:
- by any creditor or member of the company, without payment; and
- by any other person, on payment of a fee as prescribed.
Accordingly, companies that currently maintain their own register of charges should put procedures in place to ensure that they retain for inspection copies of all relevant documents in respect of charges created on or after 6 April 2013.
Companies whose register of charges is currently maintained by our Company Secretarial Unit should ensure that copies of all relevant documents are sent to Wendy Wilkes or Lynette Bridgens (contact details below) in respect of all charges created on or after that date.
Which charges can be registered under the new regime?
The general principle is that Companies House must register all charges created by a UK company including those created outside the UK, provided that it is notified of the charge in accordance with the statutory requirements. Certain charges are, however, specifically excluded from registration. These include rent deposit deeds, as well as charges excluded from registration requirements by certain other legislation.
Who may notify Companies House of the creation of a charge?
In contrast to the current statutory obligation to register a charge which applies to the company granting it, the company that created the charge may notify it but need not do so. In line with current practice, because of the severe consequences of non-notification, it is likely that prudent chargeholders (or their legal advisers) will make a notification.
What is the time limit for making the notification?
Prescribed details of the charge must be delivered to Companies House within a period of 21 days, beginning with the day after the date of the creation of the charge. This replaces the current 21-day period for registration of the charge. There are no special rules for charges created outside the UK or for charges over non-UK property; the same time limit will apply. There are, however, provisions to allow for a court application to be made to deliver a charge out of time in certain circumstances. In these cases, the priority of the charge will generally be determined from the date of its late registration and the charge will rank behind any security registered before that date.
What are the consequences of failing to notify a charge?
Criminal sanctions will no longer apply. However, the charge will, as at present, be void against a liquidator, administrator and creditor of the company, and the monies secured by the charge will immediately become payable. All registrable charges created on or after 6 April 2013 should, accordingly, be notified to Companies House in line with the new rules as a matter of course.
Where a company acquires property subject to a charge on or after that date, the company or the person interested in the charge may elect to notify Companies House of the charge but there are no sanctions (of invalidity or otherwise) for not doing so.
What about LLPs?
Separate regulations, The Limited Liability Partnerships (Application of Companies Act 2006) (Amendment) Regulations 2013 (SI 2013/618), extend the new regime to limited liability partnerships (‘LLPs’) in line with the new rules for companies.