Registration of charges created by companies and limited liability partnerships

Open date: 12 Mar 2010

Closing date: 18 Jun 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 deadline for responses was 18 June. However responses received by 30 June will be considered.

Over the Summer, we will be considering the responses received with a view to publishing a Government response by end-September.

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.

Areas for consultation

The areas for consultation are:

  • what charges should be registrable, whether there should be a time limit for registration, and the consequences of both registration and of the failure to register; 
  • what charges should be registrable, whether there should be a time limit for registration, and the consequences of both registration and of the failure to register;
  • the procedures for registration of a charge, including the effect of the conclusive certificate and the safeguards that would be needed for electronic registration; how, what and where third parties be able to discover information about a company’s charges;
  • the application of the requirements to entities other than companies incorporated under UK company law, in particular how the scheme should be modified for application to overseas companies;
  • the circumstances in which charges registered in a specialist register might be treated as if also registered at Companies House; and
  • the costs and benefits of the proposals.

Download the consultation