Registration of charges created by companies and limited liability partnerships
Open date: 12 Mar 2010
Closing date: 18 Jun 2010
Response date: 08 Dec 2010
This consultation makes proposals to revise the current scheme for the registration of company charges under the Companies Act 2006 based on the 2001 recommendations of the Company Law Review and the subsequent advice of the Law Commission.
The current system of registration for company charges dates back to the start of the 20th century. Over one hundred years later and following extensive consultation a fully-modernised system has been developed, which aims 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 with a single scheme for all UK companies
• improve the quality of information about security given by companies
• improve access to instruments creating companies' charges.
The department wishes to give stakeholders a final opportunity to consider the text of the draft regulations before they are laid before both Houses of Parliament in the Autumn and also to make any preparations they deem necessary ready for when the proposed changes come into force. If you have any concerns about any significant effects, intended or unintended, that these changes may have which you wish to raise with the Department, please email firstname.lastname@example.org before 5pm on the 7th September 2012.
Please find below draft regulations for companies and Limited Liability Partnerships (LLPs) as well as an explanatory note which sets out the rationale for our proposed amendments.
Draft regulations for Limited Liability Partnerships (LLPs) (PDF, 207 Kb)
Explanatory notes of draft regulations Part 25 of the Companies Act (PDF, 149 Kb)
Draft regulations for Companies amendments to Companies Act 2006 Part 25 (PDF, 222 Kb)
In August 2011, we published the Government’s proposals for the revised scheme together with a mock-up of Part 25 of the Companies Act 2006 a amended in accordance with the proposals and revisions to the cost assumptions for the Impact Assessment.
Views are sought on the proposed revisions to Part 25 and the cost assumptions by 30 September 2011.
Purpose of consultation
To ensure that any changes to the current scheme takes account of the views of UK companies, overseas companies, limited liability partnerships (LLPs), their creditors, legal advisors to companies and LLPs and their creditors, and to those who assess the financial status of companies.
Background to consultation
Under English law, companies are able to use any or all of their assets as security for loans. This involves the creation of a charge over the company’s assets. The scope for companies to use assets as security for loans is more restricted under Scots law as that law does not recognise fixed non-possessory charges over goods. The scheme for registration of company charges is set out in the Companies Act 2006. This scheme, which is intended to prevent the concealment by companies of secured credit, has been criticised particularly because:
- the list of registrable charges has not been revised in line with changes in law and commercial practice;
- the particulars on the public record for a charge may not be an accurate reflection of the charge created; and
- the procedures for registration are cumbersome.
This consultation relates only to modifications to the scheme provided by the Companies Act 2006. Fundamental changes for the longer term are being considered by the Secured Transactions Law Reform Project; the project director is Professor Sir Roy Goode, CBE, QC.
In Spring 2011, all those who responded to the 2010 consultation were asked for their views on certain issues that need to be resolved before the Regulations are drafted. These relate to:
- Period allowed for delivery
- On whom obligation to register falls
- Registrable and non-registrable charges
- Charges over acquired property
- Constructive notice
- Rectification of register
- Floating charge issues
- The charge instrument
- Satisfaction and release
Please see the link at the bottom of this page for the document 'Registration of Company Charges - Issues to be resolved before preparation of draft regulations'. The deadline for responses to this document was 13 May 2011.
Download the consultation
Download the government response