House of Commons - Amendments

Company Law Reform Bill [Lords] *- continued*	House of Commons

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Consequence of failure to register charges created by a company

Margaret Hodge

NC321

To move the following Clause:—

‘(1) If a company creates a charge to which section (Charges created by a company) applies, the charge is void (so far as any security on the company’s property or undertaking is conferred by it) against—

(a) a liquidator of the company,

(b) an administrator of the company, and

unless that section is complied with.

(2) Subsection (1) is subject to the provisions of this Chapter.

(3) Subsection (1) is without prejudice to any contract or obligation for repayment of the money secured by the charge; and when a charge becomes void under this section, the money secured by it immediately becomes payable.’.

Companies to keep copies of instruments creating charges

Margaret Hodge

NC322

To move the following Clause:—

‘(1) Every company shall cause a copy of every instrument creating a charge, including every order or notice a copy of which has been delivered to the company under section (Northern Ireland: registration of certain charges etc. affecting land)(3)(b), requiring registration under this Chapter to be kept at its registered office.

(2) In the case of a series of uniform debentures, a copy of one of the debentures of the series is sufficient.’.

Company’s register of charges

Margaret Hodge

NC323

To move the following Clause:—

‘(1) Every limited company shall keep at its registered office a register of charges and enter in it—

(a) all charges specifically affecting property of the company, and

(b) all floating charges on the whole or part of the company’s property or undertaking.

(2) The entry shall in each case give a short description of the property charged, the amount of the charge and, except in the cases of securities to bearer, the names of the persons entitled to it.

(3) If an officer of the company knowingly and wilfully authorises or permits the omission of an entry required to be made in pursuance of this section, he commits an offence.

(4) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.’.

Right to inspect instruments which create charges, etc.

Margaret Hodge

NC324

To move the following Clause:—

‘(1) The copies of instruments creating any charge requiring registration under this Chapter with the registrar, and the register of charges kept in pursuance of section (Company’s register of charges), shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than 2 hours in each day be allowed for inspection) to the inspection of any creditor or member of the company without fee.

(2) The register of charges shall also be open to the inspection of any other person on payment of such fee for each inspection as the company may prescribe.

(3) If inspection of copies, or of the register, is refused an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine net exceeding one-tenth of level 3 on the standard scale.

(5) If such a refusal occurs, the court may by order compel an immediate inspection of the copies or register.’.

Charges created by a company (No.2)

Margaret Hodge

NC325

To move the following Clause:—

‘(1) A company that creates a charge to which this section applies must deliver the prescribed particulars of the charge, together with a copy certified as a correct copy of the instrument (if any) by which the charge is created or evidenced, to the registrar for registration before the end of the period allowed for registration.

(2) Registration of a charge to which this section applies may instead be effected on the application of a person interested in it.

(3) Where registration is effected on the application of some person other than the company, that person is entitled to recover from the company the amount of any fees properly paid by him to the registrar on the registration.

(4) If a company fails to comply with subsection (1), an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine, and

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(6) Subsection (4) does not apply if registration of the charge has been effected on the application of some other person.

(7) This section applies to the following charges—

(a) a charge on land or any interest in such land, other than a charge for any rent or other periodical sum payable in respect of the land,

(b) a security over incorporeal moveable property of any of the following categories—

(i) goodwill,

(ii) a patent or a licence under a patent,

(iii) a trademark,

(iv) a copyright or a licence under a copyright,

(v) a registered design or a licence in respect of such a design,

(vi) a design right or a licence under a design right,

(vii) the book debts (whether book debts of the company or assigned to it), and

(viii) uncalled share capital of the company or calls made but not paid,

(d) a floating charge.’.

Charges which have to be registered: supplementary (No. 2)

Margaret Hodge

NC326

To move the following Clause:—

‘(1) A charge on land, for the purposes of section (Charges created by a company (No. 2))(7)(a), includes a charge created by a heritable security within the meaning of section 9(8) of the Conveyancing and Feudal Reform (Scotland) Act 1970.

(2) The holding of debentures entitling the holder to a charge on land is not, for the purposes of section (Charges created by a company (No. 2))(7)(a), deemed to be an interest in land.

(3) It is immaterial for the purposes of this Chapter where land subject to a charge is situated.

(4) The deposit by way of security of a negotiable instrument given to secure the payment of book debts is not, for purposes of section (Charges created by a company (No. 2))(7)(c)(vii), to be treated as a charge on those book debts.

(5) References in this Chapter to the date of the creation of a charge are—

(a) in the case of a floating charge, the date on which the instrument creating the floating charge was executed by the company creating the charge, and

(b) in any other case, the date on which the right of the person entitled to the benefit of the charge was constituted as a real right.

(6) In this Chapter “company” means an incorporated company registered in Scotland.’.

Charges existing on property acquired (No. 2)

Margaret Hodge

NC327

To move the following Clause:—

‘(1) Subsection (2) applies where a company acquires any property which is subject to a charge of any kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Chapter.

(2) The company must deliver the prescribed particulars of the charge, together with a copy (certified to be a correct copy) of the instrument (if any) by which the charge was created or is evidenced, to the registrar for registration before the end of the period allowed for registration.

(3) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of it who is in default.

(4) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.’.

Charges by way of ex facie absolute disposition etc.

Margaret Hodge

NC328

To move the following Clause:—

‘(1) For the avoidance of doubt, it is hereby declared that, in the case of a charge created by way of an ex facie absolute disposition or assignation qualified by a back letter or other agreement, or by a standard security qualified by an agreement, compliance with section (Charges created by a company (No. 2))(1) does not of itself render the charge unavailable as security for indebtedness incurred after the date of compliance.

(2) Where the amount secured by a charge so created is purported to be increased by a further back letter or agreement, a further charge is held to have been created by the ex facie absolute disposition or assignation or (as the case may be) by the standard security, as qualified by the further back letter or agreement.

(3) In that case, the provisions of this Chapter apply to the further charge as if—

(a) references in this Chapter (other than in this section) to the charge were references to the further charge, and

(b) references to the date of the creation of the charge were references to the date on which the further back letter or agreement was executed.’.

Charge in series of debentures (No. 2)

Margaret Hodge

NC329

To move the following Clause:—

‘(1) Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture-holders of that series are entitled pari passu, is created by a company, it is sufficient for purposes of section (Charges created by a company (No. 2)) if the required particulars, together with a copy of the deed containing the charge (or, if there is no such deed, of one of the debentures of the series) are delivered to the registrar before the end of the period allowed for registration.

(2) The following are the required particulars—

(a) the total amount secured by the whole series,

(b) the dates of the resolutions authorising the issue of the series and the date of the covering deed (if any) by which the security is created or defined,

(d) the names of the trustees (if any) for the debenture-holders, and

(e) in the case of a floating charge, a statement of any provisions of the charge and of any instrument relating to it which prohibit or restrict or regulate the power of the company to grant further securities ranking in priority to, or pari passu with, the floating charge, or which vary or otherwise regulate the order of ranking of the floating charge in relation to subsisting securities.

(3) Where more than one issue is made of debentures in the series, particulars of the date and amount of each issue of debentures of the series must be sent to the registrar for entry in the register of charges.

(4) Failure to comply with subsection (3) does not affect the validity of any of those debentures.

(5) Subsections (2) to (6) of section (Charges created by a company (No. 2)) apply for the purposes of this section as they apply for the purposes of that section but as if for the reference to the registration of the charge there was substituted a reference to the registration of the series of debentures.’.

Additional registration requirement for commission etc. in relation to debentures (No.2)

Margaret Hodge

NC330

To move the following Clause:—

‘(1) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to a person in consideration of his—

(a) subscribing or agreeing to subscribe, whether absolutely or conditionally, for debentures in a company, or

(b) procuring or agreeing to procure subscriptions, whether absolute or conditional, for such debentures,

the particulars required to be sent for registration under section (Charges created by a company (No. 2)) shall include particulars as to the amount or rate per cent. of the commission, discount or allowance so paid or made.

(2) The deposit of debentures as security for a debt of the company is not, for the purposes of this section, treated as the issue of debentures at a discount.

(3) Failure to comply with this section does not affect the validity of the debentures issued.’.

Charges on property outside the United Kingdom

Margaret Hodge

NC331

To move the following Clause:—

‘Where a charge is created in the United Kingdom but comprises property outside the United Kingdom, the copy of the instrument creating or purporting to create the charge may be sent for registration under section (Charges created by a company (No. 2)) even if further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situated.’.

Register of charges to be kept by registrar (No. 2)

Margaret Hodge

NC332

To move the following Clause:—

‘(1) The registrar shall keep, with respect to each company, a register of all the charges requiring registration under this Chapter.

(2) In the case of a charge to the benefit of which holders of a series of debentures are entitled, the registrar shall enter in the register the required particulars specified in section (Charges in series of debentures (No. 2))(2).

(3) In the case of any other charge, the registrar shall enter in the register the following particulars—

(a) if it is a charge created by a company, the date of its creation and, if it is a charge which was existing on property acquired by the company, the date of the acquisition,

(b) the amount secured by the charge,

(d) the persons entitled to the charge, and

(e) in the case of a floating charge, a statement of any of the provisions of the charge and of any instrument relating to it which prohibit or restrict or regulate the company’s power to grant further securities ranking in priority to, or pari passu with, the floating charge, or which vary or otherwise regulate the order of ranking of the floating charge in relation to subsisting securities.

(4) The registrar shall give a certificate of the registration of any charge registered in pursuance of this Chapter, stating—

(a) the name of the company and the person first-named in the charge among those entitled to the benefit of the charge (or, in the case of a series of debentures, the name of the holder of the first such debenture issued), and

(b) the amount secured by the charge.

(5) The certificate—

(a) shall be signed by the registrar or authenticated by the registrar’s official seal, and

(b) is conclusive evidence that the requirements of this Chapter as to registration have been satisfied.

(6) The register kept in pursuance of this section shall be open to inspection by any person.’.

The period allowed for registration (No. 2)

Margaret Hodge

NC333

To move the following Clause:—

‘(1) The period allowed for registration of a charge created by a company is—

(a) 21 days beginning with the day after the day on which the charge is created, or

(b) if the charge is created outside the United Kingdom, the period allowed for registration, 21 days beginning with the day after the day on which a copy of the instrument by which the charge is created or evidenced could, in due course of post (and if despatched with due diligence) have been received in the United Kingdom.

(2) The period allowed for registration of a charge to which property acquired by a company is subject is—

(a) 21 days beginning with the day after the day on which the transaction is settled, or

(b) if the property is situated and the charge was created outside the United Kingdom, 21 days beginning with the day after the day on which a copy of the instrument by which the charge is created or evidenced could, in due course of post (and if despatched with due diligence) have been received in the United Kingdom.

(3) The period allowed for registration of particulars of a series of debentures as a result of section (Charge in series of debentures (No.2)) is—

(a) if there is a deed containing the charge mentioned in section (Charge in series of debentures (No. 2))(1), 21 days beginning with the day after the day on which that deed is executed, or

(b) if there is no such deed, 21 days beginning with the day after the day on which the first debenture of the series is executed.’.

Entries of satisfaction and relief

Margaret Hodge

NC334

To move the following Clause:—

‘(1) Subsection (2) applies if a statement is delivered to the registrar verifying with respect to any registered charge—

(a) that the debt for which the charge was given has been paid or satisfied in whole or in part, or

(b) that part of the property charged has been released from the charge or has ceased to form part of the company’s property.

(2) The registrar may enter on the register a memorandum of satisfaction (in whole or in part) regarding that fact.

(3) Where the registrar enters a memorandum of satisfaction in whole, he shall, if required, furnish the company with a copy of the memorandum.

(4) Without prejudice to the registrar’s duty under this section to require to be satisfied as above mentioned, he shall not be so satisfied unless—

(a) the creditor entitled to the benefit of the floating charge, or a person authorised to do so on his behalf, certifies as correct the particulars submitted to the registrar with respect to the entry on the register of a memorandum under this section, or

(b) the court, on being satisfied that such certification cannot readily be obtained, directs him accordingly.

(5) Nothing in this section requires the company to submit particulars with respect to the entry in the register of a memorandum of satisfaction where the company, having created a floating charge over all or any part of its property, disposes of part of the property subject to the floating charge.’.

Rectification of register of charges (No. 2)

Margaret Hodge

NC335

To move the following Clause:—

‘(1) Subsection (2) applies if the court is satisfied—

(a) that the failure to register a charge before the end of the period allowed for registration, or the omission or mis-statement of any particular with respect to any such charge or in a memorandum of satisfaction—

(i) was accidental or due to inadvertence or to some other sufficient cause, or

(ii) is not of a nature to prejudice the position of creditors or shareholders of the company, or

(b) that on other grounds it is just and equitable to grant relief.

(2) The court may, on the application of the company or a person interested, and on such terms and conditions as seem to the court just and expedient, order that the period allowed for registration shall be extended or, as the case may be, that the omission or mis-statement shall be rectified.’.

Consequence of failure to register charges created by a company (No. 2)

Margaret Hodge

NC336

To move the following Clause:—

‘(1) If a company creates a charge to which section (Charges created by a company (No. 2)) applies, the charge is void (so far as any security on the company’s property or any part of it is conferred by the charge) against—

(a) the liquidator of the company,

(b) an administrator of the company, and

unless that section is complied with.

(2) Subsection (1) is without prejudice to any contract or obligation for repayment of the money secured by the charge; and when a charge becomes void under this section the money secured by it immediately becomes payable.’.

Companies to keep copies of instruments creating charges (No. 2)

Margaret Hodge

NC337

To move the following Clause:—

‘(1) Every company shall cause a copy of every instrument creating a charge requiring registration under this Chapter to be kept at the company’s registered office.

(2) In the case of a series of uniform debentures, a copy of one debenture of the series is sufficient.’.

Prepared: 20 July 2006