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New Clause 21
The companies charges register
. The following section is inserted in Part XII of the Companies Act 1985--
"The companies charges register
397.--(1) The registrar shall keep for each company a register, in such form as he thinks fit, of charges on property of the company. (2) The register shall consist of a file containing with respect to each charge the particulars and other information delivered to the registrar under the provisions of this Part.
(3) Any person may require the registrar to provide a certificate stating the date on which any specified particulars of, or other information relating to, a charge were delivered to him.
(4) The certificate shall be signed by the registrar or authenticated by his official seal.
(5) The certificate shall be conclusive evidence that the specified particulars or other information were delivered to the registrar no later than the date stated in the certificate ; and it shall be presumed unless the contrary is proved that they were not delivered earlier than that date.".'.-- [Mr. Forth.]
Brought up, read the First and Second time, and added to the Bill .
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New Clause 22
Delivery of particulars for registration-- . The following sections are inserted in Part XII of the Companies Act 1985-- "Company's duty to deliver particulars of charge for registration 398.--(1) It is the duty of a company which creates a charge, or acquires property subject to a charge--
(a) to deliver the prescribed particulars of the charge, in the prescribed form, to the registrar for registration, and
(b) to do so within 21 days after the date of the charge's creation or, as the case may be, the date of the acquisition ;
but particulars of a charge may be delivered for registration by any person interested in the charge.
(2) Where the particulars are delivered for registration by a person other than the company concerned, that person is entitled to recover from the company the amount of any fees paid by him to the registrar in connection with the registration.
(3) If a company fails to comply with subsection (1), then, unless particulars of the charge have been delivered for registration by another person, the company and every officer of it who is in default is liable to a fine.
(4) Where prescribed particulars in the prescribed form are delivered to the registrar for registration, he shall file the particulars in the register and shall note, in such form as he thinks fit, the date on which they were delivered to him.
(5) The registrar shall send to the company and any person appearing from the particulars to be the chargee, and if the particulars were delivered by another person interested in the charge to that person, a copy of the particulars filed by him and of the note made by him as to the date on which they were delivered. Effect of failure to deliver particulars of registration 399.--(1) Where a charge is created by a company and no prescribed particulars in the prescribed form are delivered for registration within the period of 21 days after the date of the charge's creation, the charge is void against--
(a) an administrator or liquidator of the company, and
(b) any person who for value acquires an interest in or right over property subject to the charge,
where the relevant event occurs after the creation of the charge, whether before or after the end of the 21 day period.
This is subject to section 400 (later delivery of particulars). (2) In this Part "the relevant event" means--
(a) in relation to the voidness of a charge as against an administrator or liquidator, the beginning of the insolvency proceedings, and
(b) in relation to the voidness of a charge as against a person acquiring an interest in or right over property subject to a charge, the acquisition of that interest or right ;
and references to "a relevant event" shall be construed accordingly.
(3) Where a relevant event occurs on the same day as the charge is created, it shall be presumed to have occurred after the charge is created unless the contrary is proved.
Late delivery of particulars 400.--(1) Where prescribed particulars of a charge created by a company, in the prescribed form, are delivered for registration more than 21 days after the date of the charge's creation, section 399(1) does not apply in relation to relevant events occurring after the particulars are delivered. (2) However, where in such a case--
(a) the company is at the date of delivery of the particulars unable to pay its debts, or subsequently becomes unable to pay its debts in consequence of the transaction under which the charge is created, and
(b) insolvency proceedings begin before the end of the relevant period beginning with the date of delivery of the particulars, the charge is void as against the administrator or liquidator. (3) For this purpose--
(a) the company is "unable to pay its debts" in the circumstances specified in section 123 of the Insolvency Act 1986 ; and (
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(b) the "relevant period" is--(i) two years in the case of a floating charge created in favour of a person connected with the company (within the meaning of section 249 of that Act),
(ii) one year in the case of a floating charge created in favour of a person not so connected, and
(iii) six months in any other case.
(4) Where a relevant event occurs on the same day as the particulars are delivered, it shall be presumed to have occurred before the particulars are delivered unless the contrary is proved.".'.-- [Mr. Forth.]
Brought up, and read the First time.
Mr. Forth : I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker (Sir Paul Dean) : With this it will be convenient to consider Government new clauses 23, 24 and 25.
Mr. Forth : The new clauses contain various amendments to existing provisions of part IV that relate primarily to the delivery of particulars for registration. New clause 22 would replace clause 91 of the Bill. It amends new sections 398, 399 and 400. The amendments are largely improvements to the drafting of the new sections. The principal amendment is that in new section 399(1). This makes it clear that an unregistered charge will not be void in respect of those acquiring an interest in property subject to the charge before the charge's creation.
New clause 23 would replace clause 92 of the Bill. It amends new section 401. Although the new clause contains a number of drafting changes, the only substantive amendment is in new section 401(1). This would allow further particulars of a variation to a charge to be delivered before the variation has become effective.
New clause 24 would replace clause 93 of the Bill. It contains a number of drafting amendments to new section 402. There are no substantive amendments.
New clause 25 would replace clause 94 of the Bill. It contains amendments to new section 403. We have widened the circumstances in which a memorandum may be delivered to the registrar. We have also amended new section 403 to ensure that a charge cannot become void if a memorandum is fraudulently delivered by the company while the charge still affects its property.
Question put and agreed to .
Clause read a Second time, and added to the Bill .
New Clause 23
Delivery of further particulars
. The following section is inserted in Part XII of the Companies Act 1985--
"Delivery of further particulars 401.--(1) Further particulars of a charge, supplementing or varying the registered particulars, may be delivered to the registrar for registration at any time.
(2) Further particulars must be in the prescribed form signed by or on behalf of both the company and the chargee.
(3) Where further particulars are delivered to the registrar for registration and appear to him to be duly signed, he shall file the particulars in the register and shall note, in such form as he thinks fit, the date on which they were delivered to him.
(4) The registrar shall send to the company and any person appearing from the particulars to be the chargee, and if the particulars were delivered by another person interested in the charge to that other
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person, a copy of the further particulars filed by him and of the note made by him as to the date on which they were delivered.".'. Brought up, read the First and Second time, and added to the Bill.New Clause 24
Effect of omissions and errorsin registered particulars
. The following section is inserted in Part XII of the Companies Act 1985--
"Effect of omissions and errors in registered particulars 402.--(1) Where the registered particulars of a charge created by a company are not complete and accurate, the charge is void, as mentioned below, to the extent that rights are not disclosed by the registered particulars which would be disclosed if they were complete and accurate.
(2) The charge is void to that extent, unless the court on the application of the chargee orders otherwise, as against--
(a) an administrator or liquidator of the company, and
(b) any person who for value acquires an interest in or right over property subject to the charge,
where the relevant event occurs at a time when the particulars are incomplete or inaccurate in a relevant respect.
(3) Where a relevant event occurs on the same day as particulars or further particulars are delivered, it shall be presumed to have occurred before those particulars are delivered unless the contrary is proved.
(4) The court may order that the charge is effective as against an administrator or liquidator of the company if it is satisfied-- (
(a) that the omission or error is not likely to have misled materially to his prejudice any unsecured creditor of the company, or
(b) that no person became an unsecured creditor of the company at a time when the registered particulars of the charge were incomplete or inaccurate in a relevant respect.
(5) The court may order that the charge is effective as against a person acquiring an interest in or right over property subject to the charge if it is satisfied that he did not rely, in connection with the acquisition, on registered particulars which were incomplete or inaccurate in a relevant respect.
(6) For the purposes of this section an omission or inaccuracy with respect to the name of the chargee shall not be regarded as a failure to disclose the rights of the chargee.".'.
Brought up, read the First and Second time, and added to the Bill.
New Clause 25
Memorandum of charge ceasing to affect company's property-- The following section is inserted in Part XII of the Companies Act 1985-- "Memorandum of charge ceasing to affect company's property 403.--(1) Where a charge of which particulars have been delivered ceases to affect the company's property, a memorandum to that effect may be delivered to the registrar for registration.
(2) The memorandum must be in the prescribed form signed by or on behalf of both the company and the chargee.
(3) Where a memorandum is delivered to the registrar for registration and appears to him to be duly signed, he shall file it in the register, and shall note, in such form as he thinks fit, the date on which it was delivered to him.
(4) The registrar shall send to the company and any person appearing from the memorandum to be the chargee, and if the memorandum was delivered by another person interested in
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the charge to that person, a copy of the memorandum filed by him and of the note made by him as to the date on which it was delivered.(5) If a duly signed memorandum is delivered in a case where the charge in fact continues to affect the company's property, the charge is void as against--
(a) an administrator or liquidator of the company, and
(b) any person who for value acquires an interest in or right over property subject to the charge,
where the relevant event occurs after the delivery of the memorandum.
(6) Where a relevant event occurs on the same day as the memorandum is delivered, it shall be presumed to have occurred before the memorandum is delivered unless the contrary is proved.".'.-- [Mr. Forth.]
Brought up, read the First and Second time, and added to the Bill.
New Clause 26
Further provisions with respect to voidness of charges
. The following sections are inserted in Part XII of the Companies Act 1985--
"Further provisions with respect to voidness of charges-- Exclusion of voidness as against unregistered charges. 404.--(1) A charge is not void by virtue of this Part as against a subsequent charge unless some or all of the relevant particulars of that charge are duly delivered for registration
(a) within 21 days after the date of its creation, or
(b) before complete and accurate relevant particulars of the earlier charge are duly delivered for registration.
(2) Where relevant particulars of the subsequent charge so delivered are incomplete or inaccurate, the earlier charge is void as against that charge only to the extent that rights are disclosed by registered particulars of the subsequent charge duly delivered for registration before the corresponding relevant particulars of the earlier charge.
(3) The relevant particulars of a charge for the purposes of this section are those prescribed particulars relating to rights inconsistent with those conferred by or in relation to the other charge.
Restrictions on voidness by virtue of this Part. 405.--(1) A charge is not void by virtue of this Part as against a person acquiring an interest in or right over property where the acquisition is expressly subject to the charge.
(2) Nor is a charge void by virtue of this Part in relation to any property by reason of a relevant event occuring after the company which created the charge has disposed of the whole of its interest in that property.
Effect of exercise of power of sale. 406.--(1) A chargee exercising a power of sale may dispose of property to a purchaser freed from any interest or right arising from the charge having become void to any extent by virtue of this Part--
(a) against an administrator or liquidator of the company, or (
(b) against a person acquiring a security interest over property subject to the charge ;
and a purchaser is not concerned to see or inquire whether the charge has become so void.
(2) The proceeds of the sale shall be held by the chargee in trust to be applied--
First, in discharge of any sum effectively secured by prior incumbrances to which the sale is not made subject ;
Second, in payment of all costs, charges and expenses properly incurred by him in connection with the sale, or any previous attempted sale, of the property ;
Third, in discharge of any sum effectively secured by the charge and incumbrances ranking pari passu with the charge ;
Forth, in discharge of any sum effectively secured by incumbrances ranking after the charge ;
and any residue is payable to the company or to a person authorised to give a receipt for the proceeds of the sale of the property. (3) For the purposes of subsection (2)--
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(a) prior incumbrances include any incumbrance to the extent that the charge is void as against it by virtue of this Part ; and ((b) no sum is effectively secured by a charge to the extent that it is void as against an administrator or liquidator of the company. (4) In this section--
(a) references to things done by a chargee include things done by a receiver appointed by him, whether or not the receiver acts as his agent ;
(b) "power of sale" includes any power to dispose of, or grant an interest out of, property for the purpose of enforcing a charge (but in relation to Scotland does not include the power to grant a lease), and references to "sale" shall be construed accordingly ; and (
(c) "purchaser" means a person who in good faith and for valuable consideration acquires an interest in property.
(5) The provisions of this section as to the order of application of the proceeds of sale have effect subject to any other statutory provision (in Scotland), any other statutory provision or rule of law) applicable in any case.
(6) Where a chargee exercising a power of sale purports to dispose of property freed from any such interest or right as is mentioned in subsection (1) to a person other than a purchaser, the above provisions apply, with any necessary modifications, in relation to a disposition to a purchaser by that person or any successor in title of his.
(7) In Scotland, subsections (2) and (7) of section 27 of the Conveyancing and Feudal Reform (Scotland) Act 1970 apply to a chargee unable to obtain a discharge for any payment which he is required to make under subsection (2) above as they apply to a creditor in the circumstances mentioned in those subsections.
Effect of voidness on obligation secured
407.--(1) Where a charge becomes void to any extent by virtue of this Part, the whole of the sum secured by the charge is payable forthwith on demand ; and this applies notwithstanding that the sum secured by the charge is also the subject of other security. (2) Where the charge is to secure the repayment of money, the references in subsection (1) to the sum secured include any interest payable.".'.-- [Mr. Forth.]
Brought up, and read the First time.
Mr. Forth : I beg to move, That the clause be read a Second time. This new clause inserts new provisions restricting the effect of avoidance. It is designed principally to ensure that the sanctions of avoidance and partial avoidance should not have unduly adverse effects on those dealing with charges. If we do not limit the effect of avoidance in the ways proposed in the new clause, people might be less willing to deal with charges or the property subject to them. As a consequence, creditors might become reluctant to offer secured finance to companies in certain circumstances. The objective of much in the new clause is, therefore, to disapply the effect of avoidance either where it is unnecessary or where the disadvantages flowing from it would outweigh the benefits.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
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