ACCA F4 - Corp and Business Law (ENG)

252 16: Loan capital  Part E Capital and the financing of companies

4 Registration of charges

To be valid and enforceable, charges must be registered within 21 days of creation by the Registrar.

Certain types of charge created by a company should be registered within 21 days with the Registrar by

either the company or a person interested in it (eg the debenture trustee). Charges securing a debenture

issue and floating charges are specifically registrable.

Other charges that are registrable include charges on:

 Uncalled share capital or calls made but not paid

 Land or any interest in land, other than a charge for rent

 Receivables (book debts)

 Goodwill or any intellectual property

 Ships or aircraft or any share in a ship

4.1 The registration process

The company is responsible for registering the charge but the charge may also be registered as a result

of an application by another person interested in the charge.

The Registrar should be sent the instrument by which the charge is created or evidenced. The Registrar

also has to be sent prescribed particulars of the charge.

 The date when the charge was created

 The amount of the debt which it secures

 Short particulars of the property to which the charge applies

 The person entitled to it

The Registrar files the particulars in the companies 'charges' register and notes the date of delivery. They

also issue a certificate which is conclusive evidence that the charge had been duly registered.

The 21 day period for registration runs from the creation of the charge, or the acquisition of property

charged, and not from the making of the loan for which the charge is security. Creation of a charge is

usually effected by execution of a document.

4.2 Rectification of register of changes

A mistake or omission in registered particulars can only be rectified by the court ordering an extension of

the period for registration, and with the subsequent rectification of the register. The court will only make

the order if the error or omission was accidental or if it is just and equitable to do so.

4.3 Failure to deliver particulars

The duty to deliver particulars falls upon the company creating the charge and if no one delivers

particulars within 21 days, the company and its officers are liable to a fine.

Non-delivery in the time period results in the charge being void against an administrator, liquidator or any

creditor of a company.

Non-delivery of a charge means that the sum secured by it is payable forthwith on demand.

4.3.1 Late delivery of particulars

The rules governing late delivery are the same as governing registration of further particulars, that is, a

court order is required for registration.

A charge can only be registered late if it does not prejudice the creditors or shareholders of the

company. Therefore a correctly registered fixed charge has priority over a fixed charge created earlier but

registered after it, if that charge is registered late.

FAST FORWARD