Earlier this year Part 25 of the Companies Act 2006 (Act) was amended, introducing new requirements for registering security interests at Companies House. The amendments came into force on 6 April 2013 and apply to all security (save for a few specific exceptions) created by companies and limited liability partnerships in England, Wales and Scotland on or after that date. Now that we’re a few months down the line from the changes, we’re taking a look at some of the points that seem to have caused confusion over the past few months.
Do we have to register?
You may be surprised to hear that under the new legislation it is no longer mandatory to register security with Companies House – the existing criminal sanctions for non-registration have been removed. However, before you get carried away, if the security is not registered, it will not be valid against liquidators, administrators and creditors of the company. For this reason, any creditor will still require registration of security within the 21 day time limit.
Another significant change is that PDF copies of the security are now stored at Companies House and are publicly available. There are provisions in the Act which allow certain information to be redacted and this has led to a bit of confusion as some people have thought that anything commercially sensitive could be hidden. The legislation is very restrictive as to what can be redacted. Put simply this is personal information relating to individuals, bank account identifiers (such as the account number) and signatures. If you have other sensitive information that you do not want to be made publicly available (for example, facility amounts), make sure it is not included in the charge document.
Where a company acquires an asset that is already subject to a charge the rules as to timing of registration of this vary depending, not on when the asset was acquired, but on when the original charge was created. If the original charge was created prior to 6 April 2013, registration must still be carried out within 21 days. However, there is no obligation to carry out such registrations within a specific period where the charge was created on or after 6 April 2013.
Register of charges
The requirement for companies to maintain a register of charges may have been removed, but there is still a requirement for companies to retain copies of instruments evidencing registrable charges at their registered office and so borrowers should ensure they comply with this post-completion obligation.
Paper filing v Webfiling
A significant change is the introduction of an additional method of registration. In addition to the traditional paper based postal registration, Companies House now provides an online service
- Postal filing
The postal filing process has remained largely unchanged with the MG01 form being replaced by the MR01. This form requires details of the security and the company granting it to be noted and delivered to Companies House. Registrations cost £13 per security, payable by cheque, and the process takes approximately 8 days to be completed.
This method is subject to the risks associated with late or lost postal deliveries and in the event that registration is rejected this can leave very little time to rectify and re-submit the filing application.
- Web filing
The Companies House Webfiling system now enables online registration of security for firms registered to use it. This platform requires the same information be provided as on a paper MR01 together with a copy of the security document. The cost is less than for paper filing, at £10 per registration, and can take anything up to 48 hours, however, from our experience this usually takes between 6 and 10 working hours.
Webfiling significantly reduces the risks associated with postal delay and in the event of a rejected registration, notice is given instantly by email stating reasons allowing for a quicker response and re-submission.
With the amendments made to the Act, security registration has been brought into the 21st Century. We have found that Webfiling has made the process cheaper and quicker. There have been teething problems and uncertainty over the interpretation of parts of the legislation however Companies House seems to have ironed out the majority of these and the new system now seems to be running smoothly and effectively.