Company Charge and Mortgage
A company charge is something a company uses to secure a loan. When creating the charge, a company or its representative must give a statement of the organisation particulars. This statement will include any relevant certified copies of the charge instrument and a relevant fee, which they send to the Registrar of Companies (Companies House). If the required documents aren’t sent to the Registrar in a timely fashion, the charge will be void against the liquidator or administrator and any creditor of the company if it becomes insolvent. As a result, the debt is still payable but it will be an unsecured debt. It possible to gain an extension for the charge registration period but only a court can grant such registrations. The normal period for delivery in the UK is 21 days. Any charges created on or after April 2013 must follow the single UK-wide scheme for delivery. All UK registered companies must deliver the same forms to Companies House. A summary of the number of charges a company holds and their current status are also made available.
Registration of Charges
It mandatory to register all charges, with a few exceptions:
- Charges in favour of a landlord receiving a cash deposit for the lease of their land.
- Charges created by members of Lloyd Bank to secure any obligations that are connected to underwriting business with the bank. This falls under Lloyd Act 1982.
- A charge that any other act specifically excludes from registration. One example of this is the Financial and Collateral Arrangements (No.2) Regulations of 2003.
When filing a charge, it necessary to use certain forms. These forms can be tracked by the company filings released by Companies House. They include:
- MR01 Particulars of a charge
- MR02 Particulars of a charge subject to which property or undertaking has been acquired
- MR03 Particulars of a charge subject to which property or undertaking has been acquired
- MR04 Statement of satisfaction in full or part of a charge
- MR05 Statement that part or the whole of the property has been released from the charge or no longer forms a part of the company property
- MR06 Statement of a company acting as a trustee
- MR07 Particulars of alteration of a charge (particulars of a negative pledge)
- MR08 Particulars of a charge where there is no instrument
- MR09 Particulars of a charge subject to which property or undertaking has been acquired where there is no instrument
- MR10 Particulars for the registration of a charge to secure a series of debentures where there is no instrument
- RM01 Notice of appointment of an administrative receiver, receiver, or manager
- RM02 Notice of ceasing to act as an administrative receiver or manager
Acquiring property which is already charged
If a company acquires a property that is already subject to a charge, they may register this charge. The exception to this is when a charge doesn’t require registration. The company or its representative should complete and deliver details to Companies House, along with certified copies of the instrument that creates or gives evidence of the charge.
Satisfaction of charges
What happens if the company has satisfied the debt/charge?
The company doesn’t need to inform Companies House when a charge has been partially or fully settled. However, if it wants its creditors to know that this has happened then it in its interests to register such details with Companies House. This can make it easier for the company to secure capital in future.
What should a company do if the property ceases to be charged or it no longer owns the property?
There is no requirement to submit any information to Companies House. However, it in the company interests to do so if it wants potential investors and lenders to be aware. This can make the company lending and investment prospects stronger when a charge has been settled or when it ceases to exist.
Registering charges created before 6th of April 2013
When charges have been created before 6th of April 2013, companies in England and Wales, Wales, or Northern Ireland must register the following:
- Charges on land or interest in land, except for charges for rent or any other sum arising from the land.
- A charge created or evidenced by an individual that would require registration as a bill of sale.
- Charges for the purposes of securing any issue of debentures.
- Charges on uncalled share capital of the company.
- Charges on calls made but not paid.
- Charges on book debts of the company.
- Floating charges on the company property or undertaking.
- Charges on ship or aircraft, or any shares in ships or aircraft.
- Charges on goodwill or any intellectual property.
- Companies that are registered in Scotland must register the following charges with Companies House:
- Charges on land or any interest on the land, except for charges for rent or any other sum arising from the land.
- Security over incorporeal moveable property that falls under any of the following categories:
- Licenses under patent
- Licenses under copyright
- Registered designs
- Licenses in respect of registered designs
- Design rights
- Licenses in respect of design rights
- Book debts
- Uncalled share of capital
- Calls made by the company on share of capital that havent been paid
- Security over a ship or aircraft
- Shares in ships
- Floating charges
- MG01 for particulars of a charge
- MG01s for particulars of a charge for companies based in Scotland
- MG06 for particulars of a charge subject to which property has been acquired
- MG06s for particulars of a charge subject to which property has been acquired in Scotland
- MG07 for particulars for the registration of a charge to secure a series of debentures
- MG07s for particulars for the registration of a charge to secure a series of debentures for companies based in Scotland
- MG08 for particulars of an issue of secured debentures in a series
- MG08s for particulars of an issue of secured debentures in a series for companies based in Scotland
What forms are used for charges created before 6th of April 2013?
- Particulars of a Charge – MG01 (or MG01s for companies registered in Scotland)
- Particulars of a charge subject to which property has been acquired – MG06 (or MG06s for companies registered in Scotland)
- Particulars for the registration of a charge to secure a series of debentures – MG07 (or MG07s for companies registered in Scotland)
- Particulars of an issue of secured debentures in a series – MG08 (or MG08s for companies registered in Scotland)
All such forms must be registered with Companies House.