Friday, 10 December 2010

UK: Government proposals for registration of charges by companies and LLPs

Earlier this year the Department for Business, Innovation and Skills published a consultation paper seeking views on proposals for the reform of the legal framework governing the registration of charges by companies and limited liability partnerships (see herepdf). The consultation closed in June and responses were subsequently published (see here, pdf). The Government has, this week, published its proposals (see here, pdf) together with an impact assessment (see here, pdf).

The Government proposes to introduce a single UK-wide scheme which will apply to all companies incorporated under the Companies Act 2006 (or preceding Companies Acts) and unregistered companies and limited liability partnerships (but not overseas companies). The Government proposes that the requirement to register should apply to every charge or mortgage granted by a company registered in the United Kingdom over any of its property (wherever situated) unless expressly excluded by Regulations under the Companies Act or any other statute. The criminal sanction, in Section 860 of the 2006 Act, for failure to register a charge will be abolished. There will be no change to the sanction of invalidity: if the charge is not registered within 21 days of its creation, it will be void (so far as any security on the company's property or any part of it is conferred by the charge) against the liquidator, an administrator and any creditor of the company (see Section 874 of the 2006 Act).  Electronic registration of charges will be permitted.

No comments: