On 6 April 2013, the process for registering corporate security at Companies House is due to change for charges created on or after that date. Once the changes take effect, it will be possible for security documents to be registered on-line or downloaded by anyone searching the company's registers. The aim is that the new system will be easier to use and improve access to information about registered charges.
Current requirements for the registration of security taken from companies registered in the UK are set out in Chapter 1, Part 25 of the Companies Act 2006 (the Act). The Companies Act 2006 (Amendment of Part 25) Regulations 2013 (the Regulations) are due to replace these requirements by the creation of a new Chapter A1 (new sections 859A – 859Q). It is expected that similar changes will be implemented for Limited Liability Partnerships.
Anyone that gives or takes new security on or after 6 April should be aware of the following important proposed changes:
What needs to be registered?
Currently, the Act sets out which charges must be registered at Companies House. Under the new system, although a list of exceptions is provided, the onus will be on the presenter to decide whether a charge should be registered. The list of charges not requiring registration includes a "charge in favour of a landlord on a cash deposit given as security in connection with a lease", commonly known as a rent deposit. Overseas companies are not required to register security created over UK assets at Companies House.
Consequences of non-registration
The criminal offence for failing to register a charge has been removed. However, if a charge is not registered within the requisite 21 days then it will still be void against a liquidator, administrator or creditor of the company. In addition, the Regulations stipulate that the amount secured will immediately become payable. Therefore, if in doubt, we suggest that the security should be presented for registration.
How to register
The documents can be registered by post (as before) or by a new online registration system. If you wish to use the online system, you will need to apply for the necessary access codes from Companies House. Whether submitted by post or online, the registration form will change from the current "MG" series to "MR" forms which require a new, simplified "statement of particulars". Short particulars are needed for land, ship, aircraft or intellectual property but the statement will require less detail on the extent of the assets charged and, for example, will include tick boxes to identify whether the document contains a negative pledge or a floating charge over all of the assets of the company.
Send a certified copy
The registration form will need to be accompanied by a certified copy of the charging instrument (as well as the requisite fee, which is unchanged for a filing carried out by post). If originals are sent, they will not be returned.
Significantly, the registration form and copy charging instrument registered at Companies House will become part of the public record. As a result, members of the public will be able to obtain copies of these documents. The new Regulations allow certain information to be removed from the security document prior to registration, including 'personal information' concerning an individual (other than their name), the number or other identifier of a bank or securities account and a signature. However both parties should be aware that this does not extend to the removal of negotiated commercial terms. The extent to which any commercially sensitive information can be contained in other documents should be reviewed on an individual basis. It will be important for the required detail of the charge and the charged assets to be contained in the document submitted for registration in order to avoid the potential for disclosure of additional documents that contain this information.