Company Law Reform Bill [HL] (407-413)

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL] (407-413)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 1 — Companies registered in England and Wales or in Northern Ireland
407

869
Endorsement of certificate on debentures
(1)
The company shall cause a copy of every certificate of registration given under
section 873 to be endorsed on every debenture or certificate of debenture stock
which is issued by the company, and the payment of which is secured by the
charge so registered.
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(2)
But this does not require a company to cause a certificate of registration of any
charge so given to be endorsed on any debenture or certificate of debenture
stock issued by the company before the charge was created.
(3)
If a person knowingly and wilfully authorises or permits the delivery of a
debenture or certificate of debenture stock which under this section is required
10
to have endorsed on it a copy of a certificate of registration, without the copy
being so endorsed upon it, he commits an offence.
(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.
Charges in other jurisdictions
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870
Charges created in, or over property in, jurisdictions outside the United
Kingdom
(1)
Where a charge is created outside the United Kingdom comprising property
situated outside the United Kingdom, the delivery to the registrar of a verified
copy of the instrument by which the charge is created or evidenced has the
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same effect for the purposes of this Chapter as the delivery of the instrument
itself.
(2)
Where a charge is created in the United Kingdom but comprises property
outside the United Kingdom, the instrument creating or purporting to create
the charge may be sent for registration under section 864 even if further
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proceedings may be necessary to make the charge valid or effectual according
to the law of the country in which the property is situated.
871
Charges created in, or over property in, another United Kingdom jurisdiction
(1)
Subsection (2) applies where—
(a)
a charge comprises property situated in a part of the United Kingdom
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other than the part in which the company is registered, and
(b)
registration in that other part is necessary to make the charge valid or
effectual under the law of that part of the United Kingdom.
(2)
The delivery to the registrar of a verified copy of the instrument by which the
charge is created or evidenced, together with a certificate stating that the
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charge was presented for registration in that other part of the United Kingdom
on the date on which it was so presented has, for the purposes of this Chapter,
the same effect as the delivery of the instrument itself.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 1 — Companies registered in England and Wales or in Northern Ireland
408

Orders charging land: Northern Ireland
872
Northern Ireland: registration of certain charges etc. affecting land
(1)
Where a charge imposed by an order under Article 46 of the 1981 Order or
notice of such a charge is registered in the Land Registry against registered
land or any estate in registered land of a company, the Registrar of Titles shall
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as soon as may be cause 2 copies of the order made under Article 46 of that
Order or of any notice under Article 48 of that Order to be delivered to the
registrar.
(2)
Where a charge imposed by an order under Article 46 of the 1981 Order is
registered in the Registry of Deeds against any unregistered land or estate in
10
land of a company, the Registrar of Deeds shall as soon as may be cause 2
copies of the order to be delivered to the registrar.
(3)
On delivery of copies under this section, the registrar shall—
(a)
register one of them in accordance with section 873, and
(b)
not later than 7 days from that date of delivery, cause the other copy
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together with a certificate of registration under section 873(5) to be sent
to the company against which judgment was given.
(4)
Where a charge to which subsection (1) or (2) applies is vacated, the Registrar
of Titles or, as the case may be, the Registrar of Deeds shall cause a certified
copy of the certificate of satisfaction lodged under Article 132(1) of the 1981
20
Order to be delivered to the registrar for entry of a memorandum of
satisfaction in accordance with section 876.
(5)
In this section—
“the 1981 Order” means the Judgments Enforcement (Northern Ireland)
Order 1981;
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“the Registrar of Deeds” means the registrar appointed under the
Registration of Deeds Act (Northern Ireland) 1970,
“Registry of Deeds” has the same meaning as in the Registration of Deeds
Acts,
“Registration of Deeds Acts” means the Registration of Deeds (Northern
30
Ireland) 1970 (c. 25) and every statutory provision for the time being in
force amending that Act or otherwise relating to the registry of deeds,
or the registration of deeds, orders or other instruments or documents
in such registry,
“the Land Registry” and “the Registrar of Titles” are to be construed in
35
accordance with section 1 of the Land Registration Act (Northern
Ireland) 1970 (c. 18),
“registered land” and “unregistered land” have the same meaning as in
Part 3 of the Land Registration Act (Northern Ireland) 1970.
The register of charges
40
873
Register of charges to be kept by registrar
(1)
The registrar shall keep, with respect to each company, a register of all the
charges requiring registration under this Chapter.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 1 — Companies registered in England and Wales or in Northern Ireland
409

(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 867(2).
(3)
In the case of a charge imposed by the Enforcement of Judgments Office under
Article 46 of the Judgments Enforcement (Northern Ireland) 1981, the registrar
5
shall enter in the register the date on which the charge became effective.
(4)
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
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date of the acquisition,
(b)
the amount secured by the charge,
(c)
short particulars of the property charged, and
(d)
the persons entitled to the charge.
(5)
The registrar shall give a certificate of the registration of any charge registered
15
in pursuance of this Chapter, stating the amount secured by the charge.
(6)
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
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registration have been satisfied.
(7)
The register kept in pursuance of this section shall be open to inspection by any
person.
874
The period allowed for registration
(1)
The period allowed for registration of a charge created by a company is—
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(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, 21 days beginning
with the day after the day on which the instrument by which the charge
is created or evidenced (or a copy of it) could, in due course of post (and
30
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 acquisition
35
is completed, 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 the instrument by which the charge is created or evidenced (or a
copy of it) could, in due course of post (and if despatched with due
40
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 867 is—
(a)
if there is a deed containing the charge mentioned in section 867(1), 21
days beginning with the day after the day on which that deed is
45
executed, or

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 1 — Companies registered in England and Wales or in Northern Ireland
410

(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.
875
Registration of enforcement of security
(1)
If a person obtains an order for the appointment of a receiver or manager of a
company’s property, or appoints such a receiver or manager under powers
5
contained in an instrument, he shall within 7 days of the order or of the
appointment under those powers, give notice of the fact to the registrar.
(2)
Where a person appointed receiver or manager of a company’s property under
powers contained in an instrument ceases to act as such receiver or manager,
he shall, on so ceasing, give the registrar notice to that effect.
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(3)
The registrar must enter a fact of which he is given notice under this section in
the register of charges.
(4)
A person who makes default in complying with the requirements of this
section commits an offence.
(5)
A person guilty of an offence under this section is liable on summary
15
conviction to a fine not exceeding level 3 on the standard scale and, for
continued contravention, to a daily default fine not exceeding one-tenth of
level 3 on the standard scale.
876
Entries of satisfaction and release
(1)
Subsection (2) applies if a statement is delivered to the registrar verifying with
20
respect to a 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 or undertaking charged has been released
from the charge or has ceased to form part of the company’s property
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or undertaking.
(2)
The registrar may enter on the register a memorandum of satisfaction in whole
or in part, or of the fact part of the property or undertaking has been released
from the charge or has ceased to form part of the company’s property or
undertaking (as the case may be).
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(3)
Where the registrar enters a memorandum of satisfaction in whole, the
registrar shall if required send the company a copy of it.
877
Rectification of register of charges
(1)
Subsection (2) applies if the court is satisfied—
(a)
that the failure to register a charge before the end of the period allowed
35
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
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shareholders of the company, or
(b)
that on other grounds it is just and equitable to grant relief.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 1 — Companies registered in England and Wales or in Northern Ireland
411

(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.
Avoidance of certain charges
5
878
Consequence of failure to register charges created by a company
(1)
If a company creates a charge to which section 864 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,
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(b)
an administrator of the company, and
(c)
a creditor of the company,

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
15
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 records and registers
879
Companies to keep copies of instruments creating charges
(1)
Every company shall cause a copy of every instrument creating a charge,
20
including every order or notice a copy of which has been delivered to the
company under section 872(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.
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880
Company’s register of charges
(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
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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
35
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;

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 2 — Companies registered in Scotland
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(b)
on summary conviction, to a fine not exceeding the statutory
maximum.
881
Right to inspect instruments which create charges, etc.
(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
5
section 880, 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
10
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.
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(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
20
inspection of the copies or register.
Chapter 2
Companies registered in Scotland
Charges requiring registration
882
Charges created by a company
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(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.
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(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.
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(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
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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 2 — Companies registered in Scotland
413

(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—
5
(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,
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(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,
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(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,
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(d)
a floating charge.
883
Charges which have to be registered: supplementary
(1)
A charge on land, for the purposes of section 882(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.
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(2)
The holding of debentures entitling the holder to a charge on land is not, for
the purposes of section 882(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
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payment of book debts is not, for purposes of section 882(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
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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.
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884
Duty to register charges existing on property acquired
(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