The new online system for registration of charges created by companies and LLPs in the UK came into force on 6 April 2013 with the implementation of the Companies Act 2006 (Amendment of Part 25) Regulations 2013 (SI 2013/600), all part of the process to modernise Companies House (“CH”) filing procedures which has been taking place in recent years.
In addition to CH’s webfiling and (sometimes overly) secure PROOF scheme for online filing of things such as annual returns and director appointments, companies and chargees are now for the first time able to register charges online. Registration of charges has always been one of the stricter CH processes. The new regulations should significantly simplify the process.
As ever a charge against a UK company must still be registered to be fully enforceable. Correctly registered charges are valid against a liquidator, administrator and any creditor of the company that created the charge. The 21 day time limit remains; failure to register within that time will void the security against those parties, and in such circumstances the holder of the unregistered charge would rank as an unsecured creditor. When a charge becomes void, the money secured by it immediately becomes payable.
Last minute sprints to CH to register a charge should however have become a thing of the past, as the 21 day deadline for registration can now be complied with online by a few clicks of a button. The amended legislation also states that a person with an interest in a charge may deliver it for registration, amending the previous requirement that it must be registered, although this is unlikely to have much impact as, due to the effect on enforceability of not registering, it remains extremely unwise not to register.
Looking at the practicalities, the form MG01 has been replaced with a new, slimmed down form MR01. The requirement in the form for a long description of the amount secured and property charged has gone and a certified copy of the instrument should be provided instead of the original. (CH has unhelpfully added that any original instruments delivered to them will not be returned.)
The electronic registration fee will be reduced to £10, while the paper filing remains at £13. Any electronic filing must be by pdf, and less than 10MB (which may produce a few IT challenges). A lender or company authentication code is required for the online filing service.
Probably the most intriguing part of the new regime to readers is that a full certified copy of the instrument will appear on the register, unlike the summary available to the public previously. This could lead to sensitive information being stripped out of charge instruments by cautious lenders and borrowers, although in reality much of the information already had to be available at CH in the form MG01, and the charge generally contains quite banal information.
Helpfully, certain information can be redacted from the copy of the instrument filed at CH, including personal information concerning an individual (other than his name), the number or other identifier of a bank or securities account of a company or individual, and a signature. CH guidance suggests that the information that can be redacted relates to the definition of personal information on the Information Commissioner’s Office website, however there is no more specific explanation and it remains to be seen how much information CH will allow to be redacted. A statement that certain information has been redacted must be included on the certified copy. The ever present threat of the 21 day deadline is likely to lead to a conservative approach to redaction, due to the mad rush that generally ensues if an instrument is rejected first time round.
There is also the additional new threat that a company must, if the charging instrument does not itself contain all the particulars required under the new regime but they are contained in other documents referred to in it, make those documents available to the register as well. Parties will need to take care that they are not making available sensitive information which they would rather not make public.
While no doubt there will be the usual gremlins, delays and other delights of working out this new system, it is promising to see CH taking further tentative steps into the 21st Century.