This area of law is covered by Companies Act 2006, Part 25, sec 860 - sec894.Under the law of
England and Wales (covered by CA 2006, Part 25, Chapter 1), 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 he company's administrator or liquidator, or any creditor of the company (e.g. a subsequent chargee on the same
property). Note, however, that the charge remains valid against the company.
Similar rules apply to Scotland under Part 25, Chapter 2.
The statutory duty to register the charge rests on the company and its officers, but the lenderr is entitled to register the chargewill 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 lenderr and be expected to attend to registration).
Registration is effected by sending to Companies House an executed copy of the charge, together with form MG01 (which can be downloaded from Companies House). Any missing details on the form may 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 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.
When the charge is released a memorandum of satisfaction must be lodged using form MG02.
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.
- a charge on land or any interest in land, other than a charge for any rent or other periodical sum issuing out of land,
- a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale,
- a charge for the purposes of securing any issue of debentures,
- a charge on uncalled share capital of the company,
- a charge on calls made but not paid,
- a charge on book debts of the company,
- a floating charge on the company's property or undertaking,
- a charge on a ship or aircraft, or any share in a ship,
- a charge on goodwill or on any intellectual property.
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.