Overseas companies with a registered UK establishment do not have to register charges over their UK property created on or after 1 October 2011. This change is part of the proposals of the Department for Business Innovation & Skills (BIS) to simplify and consolidate the charge registration schemes which currently apply to UK companies, overseas companies with UK establishments and limited liability partnerships.
The old regime
Prior to 1 October 2011, overseas companies with a registered UK establishment were required to register charges over UK property at Companies House within 21 days of creation of such charge (the Registration Requirement). Failure to do so resulted in the charge being void in the event of the company's insolvency against a liquidator, administrator or creditor of the overseas company.
Overseas companies were also required to maintain a register of any registrable charges. The location of the register had to be in the UK and the address notified to the Registrar of Companies.
The Registration Requirement applied if the charged property was in the UK at the time the charge was created. This led to difficulties in relation to certain assets, in particular intangible assets as their location may be uncertain. To avoid the risk of an invalid charge, lenders would register charges, thus incurring costs and time, where there was any doubt over the location of the charged assets.
Lenders also found it difficult to discover whether an overseas company has registered a UK establishment as the UK establishment may be registered under a different name to the overseas company.
The new regime
With effect from 1 October 2011, the Registration Requirement has been abolished. Overseas companies with a registered UK establishment are no longer required to register charges at Companies House which are created on or after 1 October 2011.
Overseas companies must continue to maintain a register of charges in the UK. However, the charges available for inspection are limited to charges over:-
- land in the UK;
- ships, aircraft and intellectual property registered in the UK; and
- floating charges (except any whose terms expressly exclude property in the UK).
Effect of the new regime
Charges created up to and including 30 September 2011 still need to be registered with Companies House. However, going forward, a company search and the UK register of charges will no longer provide complete information on mortgages over an overseas company's UK assets. It will therefore be important to obtain the appropriate information, including details of the instrument creating the charge, from the overseas company itself.