In recent years the regime for the registration of charges by foreign (ie non- English) companies has been radically overhauled. The final stage of this overhaul was implemented on 1 October 2011 through the Overseas Companies (Execution of Documents and Registration of Charges) (Amendment) Regulations 2011, following which English lawyers can rejoice at the eradication of one much-loathed blot on an otherwise transactional-friendly legal system.
Registration of charges - the basic premise
Under English law, most security must be registered at Companies House. The general purpose of this is to provide a means by which persons dealing with a company can discover what security has been created by that company. If the security is not registered within the prescribed time limits that security becomes void against third parties.
The old law
Turn the clock back by two years, and as a result of the infamous “Slavenburg” case, this principle was given extra-territorial effect as it applied not only to companies incorporated in the UK and those which had registered a place of business in the UK, but also to companies which ought to have registered a place of business in the UK even if they had not in fact done so. Under the old law, the requirement for registration arose whenever the overseas company concerned had an established place of business in the UK, whether or not it had actually registered it. As this trigger for registration was difficult to determine, the cautious view was that the registration requirement applied to all overseas companies which created security over property in the UK.
This was time-consuming for the lawyers, burdensome to Companies House and costly to the commercial parties involved. And because the Slavenburg register could not be searched, it served absolutely no purpose.
The new law
The effect of the 2011 Regulations is that overseas companies (whether or not registered as overseas companies in the UK) creating security over property in the UK on or after 1 October 2011 are not required to register these at Companies House. The registration requirement will only apply to UK companies. A result.