sc1902007.535-541

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
535

Company Law Reform Bill–[ [], continued

(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

Added  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

Added  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.

S.C.D.  Standing Committee Proceedings: 20th July 2006
536

Company Law Reform Bill–[ [], continued

(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,

(c)
a security over a ship or aircraft or any share in a ship,

(d)
a floating charge.’.

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

Margaret Hodge

Added  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.

S.C.D.  Standing Committee Proceedings: 20th July 2006
537

Company Law Reform Bill–[ [], continued

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

Scotland.’.

Charges existing on property acquired (No. 2)

Margaret Hodge

Added  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

Added  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

S.C.D.  Standing Committee Proceedings: 20th July 2006
538

Company Law Reform Bill–[ [], continued

(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

Added  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,

(c)
a general description of the property charged,

(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

Added  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—

S.C.D.  Standing Committee Proceedings: 20th July 2006
539

Company Law Reform Bill–[ [], continued

(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

Added  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

Added  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,

(c)
short particulars of the property charged,

(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

S.C.D.  Standing Committee Proceedings: 20th July 2006
540

Company Law Reform Bill–[ [], continued

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

Added  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

S.C.D.  Standing Committee Proceedings: 20th July 2006
541

Company Law Reform Bill–[ [], continued

(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

Added  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

Added  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