Proposed Changes to the Securities Registration Regime

Wake Smith Solicitors 12 August 2011

On 10 August 2011 the department for Business, Innovation and Skills published its proposals for changes to the securities registration regime as currently set out in the Companies Act 2006.

The government has requested comments by 30 September 2011 with a view to publishing draft regulations in early 2012 and the changes coming into force on 01 October 2012.

Briefly the proposed changes encompass:

To redefine which security will be registrable security under the Companies Act 2006. The proposals simplify the list of registrable security such that all charges created by a company will be registrable, subject only to a limited list of exceptions, namely: (i) rent deposit deeds; (ii) security created by corporate members of Lloyd's of London over their underwriting obligations; (iii) pledges created over documents or tangible movable property; and (iv) security excluded by other statutes;
A definition of the 'date of creation' is to be introduced. Whilst under English Law, 'creation' is a matter of common law, other jurisdictions, including Scotland, have different regimes and as such the Companies Act 2006 is to provide a universal definition for the purpose of registration of all security at Companies House;
Whilst the 21 day time limit will remain in place, this is amended to state that the period runs from the day after the day on which the security is created and ends on the day of delivery to Companies House and not the day on which Companies House actually registers the security;
There will be new requirements for filing brief particulars of security and a certified copy (rather than an original) of the security instrument;
Electronic filing of charges will be made possible;
The requirement for overseas companies to register with Companies House security granted over their assets in the UK is to be abolished;
Criminal sanctions for the failure to register a registrable charge is to be repealed, however, an unregistered but registrable charge will still be void as against a liquidator, administrator or creditor of the company, but may still be valid against the security taker;
Whilst the filing of a statement of satisfaction or release will remain voluntary, where such filing is made by the company there will also need to be a statement explaining why it is not being made by the security taker and that statement will be placed on the public record.