Following an extensive consultation process, new regulations come into force on 6 April 2013 repealing and replacing the current law in relation to registration of security interests created by UK companies over their assets.
The primary purpose of the Regulations is to provide a single scheme applicable to all UK companies for the registration, alteration and satisfaction of charges created by UK companies and to clarify perceived uncertainties under the current regime.
The new regime will apply to security interests created on or after 6 April 2013 and represents a change in emphasis but in practice retains many of the features of the current regime.
The key changes to the law are:
- There will be a single UK-wide scheme covering all UK registered companies.
- A company that has created a charge, or any person interested in the charge (including the chargeholder), may register the charge unless the charge is excepted (see further below). Given that the consequence of non-registration is retained by the Regulations - that the charge will be void against a liquidator, administrator or creditor of the company - a chargeholder's incentive to ensure registration of all registerable charges remains.
- The criminal sanction for failure to register a charge is repealed.
- Instead of a list of registerable charges as set out in the current legislation, all charges created by UK companies can be registered unless falling within an exception. The three stated exceptions are rent security deposits, Lloyd's trust deeds and charges excluded from registration requirements by other legislation, such as financial collateral by virtue of the Financial Collateral Arrangements (No.2) Regulations 2003.
- Registration is effected by the delivery to Companies House within the period of 21 days from the date of creation of the charge (unless a court order allowing an extended period is made) of a statement of particulars, accompanied by a certified copy of the instrument creating the charge and the requisite fee. Registration may also be effected by electronic filing of the statement of particulars and the charge instrument.
- The Regulations contain provisions to determine the date of creation of the charge, which largely clarifies differences of English and Scottish law and the position regarding instruments held in escrow.
- The statement of particulars must include information as to whether the charge contains:
- a floating charge and, if so, whether it is expressed to cover all the property and undertaking of the company; and/or
- provisions which prohibit or restrict the company from creating further security that will rank equally with or ahead of the charge.
- As well as the statement of particulars, a certified copy of the charge instrument will be on the public register. Personal information relating to an individual (other than the individual's name), signatures and bank or securities' account numbers may be redacted before the instrument is submitted for registration.
- Each registered charge will be allocated a unique reference code by Companies House. This code will need to be displayed on any forms subsequently filed in respect of that charge.
- Where a previously registered charge is amended by the addition of provisions prohibiting or restricting the company from creating further security that will rank equally with or ahead of the charge, or a variation in the ranking of the charge in relation to any fixed security or any other charge, the chargor or chargeholder may notify Companies House of the changes by submitting the prescribed form together with a certified copy of the instrument effecting the amendments.
- UK companies will no longer be required to maintain their own registers of security with their books, but will need to have copies of relevant instruments available for inspection.
The new prescribed forms will be available from the Companies House website from 6 April 2013 and will have the prefix "MR". The new registration requirements will apply to charges created on or after 6 April 2013. However, the provisions of the Regulations concerning amendments to charges, enforcement of security, release and satisfaction and will apply to any notifications made on or after 6 April 2013 regardless of when the charge was created.
The Regulations: the Companies Act 2006 (Amendment of Part 25) Regulations 2013 (SI 2013 No. 600) were published 15 March 2013 and with effect from 6 April 2013 repeal and replace Part 25 of the Companies Act 2006. The full text of the Regulations can be found here.
Similar changes will apply to charges created by limited liability partnerships pursuant to the Limited Liability Partnerships (Application of Companies Act 2006) (Amendment) Regulations 2013.