Company Law Reform Bill [HL] (414-420)

House of Commons

Session 2005 - 06
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Company Law Reform Bill [HL] (414-420)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 2 — Companies registered in Scotland
414

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
5
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—
10
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
maximum.
885
Charge by way of ex facie absolute disposition, etc
(1)
For the avoidance of doubt, it is hereby declared that, in the case of a charge
15
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 882(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
20
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—
25
(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.
Special rules about debentures
30
886
Charge in series of debentures
(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 882 if the required particulars, together with a copy of the
35
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,
40
(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,

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 2 — Companies registered in Scotland
415

(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
5
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.
10
(4)
Failure to comply with subsection (3) does not affect the validity of any of those
debentures.
(5)
Subsections (2) to (6) of section 882 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
15
of the series of debentures.
887
Additional registration requirement for commission etc. in relation to
debentures
(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—
20
(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 882 shall
25
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
30
debentures issued.
Charges on property outside the United Kingdom
888
Charges on property outside United Kingdom
Where a charge is created in the United Kingdom but comprises property
outside the United Kingdom, the copy of the instrument creating or purporting
35
to create the charge may be sent for registration under section 882 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.
The register of charges
889
Register of charges to be kept by registrar
40
(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 2 — Companies registered in Scotland
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(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 886(2).
(3)
In the case of any other charge, the registrar shall enter in the register the
following particulars—
5
(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,
10
(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
15
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
20
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—
25
(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
30
person.
890
The period allowed for registration
(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
35
(b)
if the charge is 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.
40
(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
45
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

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 2 — Companies registered in Scotland
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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 886 is—
(a)
if there is a deed containing the charge mentioned in section 886(1), 21
5
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.
891
Entries of satisfaction and relief
10
(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
15
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.
20
(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
25
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
30
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.
892
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
40
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

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 2 — Companies registered in Scotland
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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
893
Charges void unless registered
(1)
If a company creates a charge to which section 882 applies, the charge is void
5
(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
(c)
any creditor of the company
10

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’ records and registers
15
894
Copies of instruments creating charges to be kept by company
(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
20
series is sufficient.
895
Company’s register of charges
(1)
Every company shall keep at its registered office a register of charges and enter
in it all charges specifically affecting property of the company, and all floating
charges on any property of the company.
25
(2)
There shall be given in each case a short description of the property charged,
the amount of the charge and, except in the case 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
30
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.
35
896
Right to inspect copies of instruments, and company’s register
(1)
The copies of instruments creating charges requiring registration under this
Chapter with the registrar, and the register of charges kept in pursuance of
section 895, shall be open during business hours (but subject to such reasonable

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 26 — Company charges
Chapter 3 — Powers of the Secretary of State
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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 be open to the inspection of any other person on
payment of such fee as the company may prescribe.
5
(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
10
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 in relation to a company, the court may by order compel
an immediate inspection of the copies or register.
15
Chapter 3
Powers of the Secretary of State
897
Power to make provision for effect of registration in special register
(1)
In this section a “special register” means a register, other than the register of
charges kept under this Part, in which a charge to which Chapter 1 or Chapter
20
2 applies is required or authorised to be registered.
(2)
The Secretary of State may by order make provision for facilitating the making
of information-sharing arrangements between the person responsible for
maintaining a special register (“the responsible person”) and the registrar that
meet the requirement in subsection (4).
25

“Information-sharing arrangements” are arrangements to share and make use
of information held by the registrar or by the responsible person.
(3)
If the Secretary of State is satisfied that appropriate information-sharing
arrangements have been made, he may by order provide that—
(a)
the registrar is authorised not to register a charge of a specified
30
description under Chapter 1 or Chapter 2 of this Part,
(b)
a charge of a specified description that is registered in the special
register within a specified period is to be treated as if it had been
registered (and certified by the registrar as registered) in accordance
with the requirements of Chapter 1 or, as the case may be, Chapter 2,
35
and
(c)
the other provisions of Chapter 1 or, as the case may be, Chapter 2 of
this Part apply to a charge so treated with specified modifications.
(4)
The information-sharing arrangements must ensure that persons inspecting
the register of charges—
40
(a)
are made aware, in a manner appropriate to the inspection, of the
existence of charges in the special register which are treated in
accordance with provision so made, and

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Part 27 — Arrangements and reconstructions
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(b)
are able to obtain information from the special register about any such
charge.
(5)
An order under this section may—
(a)
modify any enactment or rule of law which would otherwise restrict or
prevent the responsible person from entering into or giving effect to
5
information-sharing arrangements,
(b)
authorise the responsible person to require information to be provided
to him for the purposes of the arrangements,
(c)
make provision about—
(i)
the charging by the responsible person of fees in connection
10
with the arrangements and the destination of such fees
(including provision modifying any enactment which would
otherwise apply in relation to fees payable to the responsible
person), and
(ii)
the making of payments under the arrangements by the
15
registrar to the responsible person,
(d)
require the registrar to make copies of the arrangements available to the
public (in hard copy or electronic form).
(6)
In this section “specified” means specified in an order under this section.
(7)
A description of charge may be specified, in particular, by reference to one or
20
more of the following—
(a)
the type of company by which it is created,
(b)
the form of charge which it is,
(c)
the description of assets over which it is granted,
(d)
the length of the period between the date of its registration in the
25
special register and the date of its creation.
(8)
Provision may be made under this section relating to registers maintained
under the law of a country or territory outside the United Kingdom.
(9)
An order under this section is subject to negative resolution procedure.
898
General power to make amendments to this Part
30
(1)
The Secretary of State may by regulations under this section—
(a)
amend this Part by altering, adding or repealing provisions,
(b)
make consequential amendments or repeals in this Act or any other
enactment (whether passed or made before or after this Act).
(2)
Regulations under this section are subject to affirmative resolution procedure.
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Part 27
Arrangements and reconstructions
Scheme of this Part
899
Scheme of this Part
(1)
The provisions of this Part apply where a compromise or arrangement is
40
proposed—