Changes to UK Company Charge Registration Regime
The regime to be followed when registering charges created by companies and LLP's has been changed with effect from today (6 April 2013) following a series of Government consultations on the previous regime.
The Government's aims are that new regime will:
- 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
A summary of some of the key changes coming into force today are as follows:
1. The criminal offence for a failure to register a charge has been removed, though the consequence of invalidity against a liquidator, administrator and creditor is retained.
2. The separate registration regimes for Scottish and English companies have been removed, resulting in a single UK-wide regime.
3. For the first time it is possible to register charges electronically (the paper based system is also retained). The charge for filing for registering the charge online will be £10 in comparison to the £13 paper filing fee.
4. The biggest change under the new regime is that a certified copy of the charge document (where the charge is documented) now has to be submitted with all registration applications. The charge document will then be uploaded to the Companies House website and will be a matter of public record. Under the previous regime whilst the charge document was submitted to Companies House for registration it was not then made available to the public. This change has led to concerns that charge documents created on or after 6 April 2013, will be available to be downloaded by the public even though they may contain sensitive commercial information.
To try and allay some (but not many) of these concerns the new legislation allows certain information to be redacted from the certified copy of the charge document to be registered:
An individual's personal information (though not their name);
Bank account numbers and other identifiers; and
5. A new form MR01 replaces the old MG01 and contains a Section "859 D Statement". In reality the information to be included on the MR01 is not very different from that which would have been included on an MG01 (such as details of the persons entitled to the benefit of the charge, whether the charge contains a floating charge and details of any negative pledges). As a result this aspect of the new regime does not change much, though of course people need to be aware that the MR01 now has to be used to prevent an attempted registration using an MG01 being rejected, and possibly falling foul of the 21 day time limit for registration (discussed below) as a result.
6. The strict 21 day time period for registration of a charge is retained - the court procedure for registration of charges outside of this time period is also retained should a company find itself in a situation of failing to have met this time limit. There is therefore only a short period in which companies and their advisers will have to get comfortable with the requirements of the new regime.
At this point the change causing most concern has been around the requirement to file copies of all charge documents which then become a matter of public record. In our view this will be either a pro or a con depending upon the situation we advising on.
It is understandable that a company or other institution may not want all details of their charge to be available for the public to download; however in reality the majority of charge documents follow a general format which most companies, lenders and their advisors are well aware of so in a lot of cases nothing unusual will be revealed by being able to see the whole document.
A positive aspect of the new regime will be when seeking to find out information about a company (for example for due diligence purposes) and obtaining copies of charge documents (created after 6 April 2013) will now be much easier, where as previously you had to approach the company itself and/ or its lenders who often had no desire to release such documents and sometimes were unable to locate them!
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.