This area of law is covered by Companies Act 2006, Part 25, sec 860 - sec894. The Companies Act 2006 (Amendment of Part 25) Regulations 2013 came into force on 30th. April 2013 and replace all the original Part 25 of the Companies Act 2006.
The aims of the new provisions are to:
- streamline procedures and reduce costs for those putting information on the public record, in particular by enabling electronic filing
- reduce uncertainty as to what charges must be registered
- replace two current schemes which depend on the company's place of registration with a single scheme for all UK-registered companies
- improve the quality of information about security given by companies
- improve access to the instruments creating companies' charges
The changes also apply, with minor modifications, to limited liability partnerships by a separate statutory instrument, the Limited Liability Partnerships (Application of Companies Act 2006) (Amendment) Regulations 2013.
The main changes are:
- There is a UK-wide regime for registration. This means that there will no longer be separate filing requirements for charges created over companies registered in Scotland (apart from a specific floating charge requirement applicable to form 466 as explained below).
- Charges can be registered electronically or on paper. The appropriate MR form must be sent with a certified copy of the instrument, for example the mortgage deed, creating the charge. If filed electronically the certified copy must be in .pdf form with a maximum file size of 10 MB. A copy of the instrument will be placed on the public record and can be downloaded. It is possible to redact some information which could be considered sensitive, such as personal information relating to an individual (other than their name) or the number or other identifier of a bank or securities' account. The new forms will require less information than currently required in the current forms.
- Instead of a list of registerable charges being shown in the legislation (as is the case with the original Part 25 of the Act), a list of exceptions is now provided. Every other charge must be registered.
- Charges must still be registered within 21 days of the date of the charge, but this no longer applies to the particulars of a property acquired which is subject to a charge.
- To file electronically, lenders (or anyone other than the company itself who is presenting the particulars for registration) will have to apply for a lender authentication code. This will be a one-off application to enable them to send future charge documents for registration. (Companies may file charges against their own company using the company authentication code and will not need to obtain a lender authentication code (LAC) for this purpose).
- Any charge, charge over property acquired or charge to secure a series of debentures registered, with a creation date on or after 6 April 2013 will be allocated a 12 digit Unique Reference Code (URC), which will be displayed on the certificate. If the charge is subsequently satisfied or amended, the presenter will need to supply the URC as part of the form. This will enable Companies House and searchers of the company's record to more easily link charges to related filings.
- There are new forms, all beginning with the letters “MR” for both companies and LLPs. Forms are available from Companies House. For the first time there are separate forms for registration of a charge which is created by an instrument and those created where there is no instrument.
- The criminal offence for failure to register a charge has been removed.
- The new requirements for registration will apply to any charges created on or after 30th. April 2013.
- Scottish floating charges. Form 466 will remain in force (and subject to the 21-day filing limit) for alterations to a Scottish floating charge (SFC). For SFCs created before 6 April 2013 the filing requirements under sec466 are unchanged. For SFCs created on or after 6 April 2013, the certified copy of the alteration, etc. will be required, the 21 days rule still applies and less information is required in the particulars as prescribed in Schedule 2 Paragraph 1 of the Regulations.
- Fees. The fee for electronic registration as at April 2013 is £10 and for registration on paper is £13.
Late registration or rectification of the details registered can be obtained under CA 2006, sec873. This applies if the court is satisfied that the omission to register a charge within 21 days, or the omission or mis-statement of any particular, with respect to a charge or a memorandum of satisfaction was accidental, or due to inadvertence or of some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or on other grounds it is just and equitable to grant relief. The court can, on the application of the company or a person interested, and on such terms and conditions as seem just and expedient, order that the time for registration shall be extended or, as the case may be that the omission or mis-statement shall be rectified.
If the court makes an order under this section it will preserve the rights of interested parties (such as creditors secured on the property charged) which have been acquired between the end of the 21 day period and the date of the court order.
Other registration of charges
- If the charge affects land it may also need to registered at the Land Registry (or in the case of unregistered land with the registrar of land charges).
- The company must keep a copy of every charge on its property (CA 2006, sec890) and its own register of charges (sec891). This is a statutory register to which the public has the same rights of access as to the register of members, etc.
Apart from the note above in relation to form 466, the law of Scotland is now included in the new Part 25.