The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 ("Regulations") were published on 21 July 2009 and are due to come into force on 1st October this year.
The published Regulations clarify the requirements of UK law relating to execution of documents and registration of charges for overseas companies and should be taken into account both by UK companies transacting with overseas companies and the overseas companies themselves.
The Regulations set out execution formalities for foreign companies with separate sections for both Scots law and the laws of England and Wales and Northern Ireland. There is also provision for a unifying regime for the registration of charges over property in the UK created by overseas companies registered in the UK.
In respect of execution, the Regulations essentially replicate the current position but relate to underlying provisions in the Companies Act 2006 rather than provisions in the outgoing 1985 Companies Act. Part 2 of the Regulations, amongst other provisions, states that documents governed by the laws of England and Wales or Northern Ireland may be executed by a foreign company by that company affixing its common seal to the document or in any manner permitted by the laws of the territory in which that company is incorporated. The latter will have the same effect in relation to that company as if it were an English, Welsh or Northern Irish company executing a document under common seal. The provisions relating to Scots law state that any enactment, signature or subscription of a document by an overseas company which is in accordance with the provisions of the Requirements of Writing (Scotland) Act 1995 will have effect as though executed by that company under common seal. Signatories should be ware that the provisions are not dependent upon the overseas company registering in the UK with the registrar of companies.
The regime for governing the registration of charges over UK property granted by overseas companies only applies to overseas companies with one or more establishment registered in the UK. This removes the need for "just-in-case" registrations as were common under the previous regime to cover the eventuality that a company ought to have registered but had neglected to do so. The Regulations render obsolete the Slavenburg Register which was previously held by Companies House to archive charges created by overseas companies who had not registered in the UK. As is the case with registerable charges created by UK Companies, failure to register charges requiring registration under the Regulations makes such charge void against a liquidator, administrator or creditor of the company.
The Regulations provide a further requirement for overseas companies to keep a register of charges and to make both this register and copies of instruments available for inspection. The register need only contain registrable charges and comply with the same rules relating to the exercise of inspection rights that are applicable to UK private companies.
The issue of registration of charges will be revisited in 2010. The explanatory memorandum accompanying the Regulations confirms that the Department for Business Innovation and Skills intends to consult on proposals to change the general regime for the registration of charges.