How is a debenture registered?

Note: The 1985 legislation was amended by provisions of the 1989 Act, but these have not been brought into effect.

Debentures as such, are not registered, but charges securing debentures are. Under the law of England and Wales, practically every type (see full list below) of charge on a company's property must be registered at Companies House within 21 days of the creation of the charge. Failure to do so renders the charge void against any creditor of the company (e.g. a subsequent chargee) or the company's administrator or liquidator. The charge remains valid against the company and the loan secured by the charge becomes immediately repayable (whatever the terms of the loan): CA 1985, sec395.

The statutory duty to register the charge rests on the company and its officers (sec399), but the debenture-holder will usually attend to registration so as to ensure that the priority of the charge is not lost. (Often the company's solicitor will act also for the debenture-holder and be expected to attend to registration).

Registration is effected by sending to Companies House an executed copy of the charge, together with form M 395 (which can be downloaded from Companies House). If there is a floating charge containing a clause prohibiting the company from creating any charges ranking pari passu with, or in priority to, the charge, this should be endorsed on the form. Any missing details on the form will mean that it cannot be accepted by Companies House, so making it difficult to obtain registration within the 21 day period. Late registration can be effected only by order of the court. A simpler alternative is for the charge to be re-executed by the parties, and then registered within the new 21 day period.

Late registration or rectification of the details registered can be obtained under CA 1985, sec404. 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.

When the charge is released a memorandum of satisfaction must be lodged: CA 1985, sec403, using form M 403 (a) or (b).

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 register of charges affecting its property CA 1985, sec407. This is a statutory register to which the public has the same rights of access as to the register of members, etc. The company must also keep a copy of every charge affecting its property at the registered office, where it may be inspected by any member or creditor.

The full list of charges requiring registration under sec395 is:

a charge for the purpose of securing any issue of debentures;
a charge on the capital of a company;
a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;
a charge on land (wherever situated) or any interest in it, but not including a charge for any rent or other periodical sum issuing out of the land;
a charge on book debts of a company;
a floating charge on the company's undertaking or property;
a charge on calls made but not paid;
a charge on a ship or aircraft, or any share in a ship;
a charge on goodwill, on a patent or licence under a patent, on a trademark or on a copyright or a licence under a copyright.

By sec396 (4) 'charge' includes mortgage.

The Law of Scotland in this area is covered by CA 1985, sec410 - sec424. The form for registration of a charge in Scotland is form 410.

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