Registration of company charges/ debentures/ mortgages
The Department for Business, Innovation and Skills (DBIS) has recently issued a consultation on proposed amendments to the company charge registration provisions under the Companies Act 2006.?The key areas for consultation are:
Which charges must be registered, for example whether any charge should be registerable unless specifically excluded from the registration requirements.
The procedure and particulars for registration, including:?
? the introduction of electronic registration at Companies House
? the removal of the requirement to deliver the charge instrument (or a certified copy)
? whether to introduce a requirement that only a charger may register a charge
? whether to allow a chargee to voluntarily file changes relating to the identity of the person entitled to the charge
? whether a chargor who has granted a floating charge should be required to state if the charge includes a negative pledge or an automatic crystallisation clause
? whether the chargee should be responsible for filing a memorandum of satisfaction in relation to a charge.
Whether the 21 day time limit for registration should be abolished and if so with what safeguards.
The consequences of registering and not registering a registerable charge, for example:?
? whether the sanction of invalidity for failure to register should be modified so that an unregistered charge is ineffective against a liquidator, administrator and execution creditors (not all creditors) of a company
? whether to remove the criminal sanction for failure to register and
? who should be treated as having notice of a registered charge.
How the registration requirements should be modified for overseas companies, limited liability partnerships and unregistered companies.
Who should have access to a company's charge information, for example whether the right to inspect company charge information should be limited to the company's creditors and members.
The circumstances in which charges registered in a designated "specialist register", such as the Land Registry (when it becomes a fully on-line system) or the Scottish Register of Floating Charges (when operational), might be treated as if also registered at Companies House.
The?DBIS plans to publish its summary of responses by the end of September 2010. DBIS also expect there to be further discussions with stakeholders before any regulations are drafted. Lenders will be particularly interested in the proposals.