Guide to registering a charge at Companies House

Almost all charges should be registered with Companies House, so a good understanding of what is required to file an MR01 form is essential.

 

A charge, or mortgage, refers to the rights a company gives to a lender in return for a loan. The rights are often in the form of security given over a company asset or group of assets.

This article considers the questions that most frequently arise with regards to registering a charge at Companies House, before explaining the registration process itself and considering what you can do if you fail to register a charge within the permitted time period.

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Who can register a charge with Companies House?

Section 859A (2) of the Companies Act 2006 states that ‘the company or any person interested in the chargemay deliver a form MR01 to Companies House. In practice it is usually the company, the lender, or a representative of either, such as a legal or accounting firm that delivers the application for registration of a charge.

 

Should all charges be registered with Companies House?

The Companies Act 2006 (Amendment of Part 25) Regulations 2013 simplified the requirements such that almost all charges must now be registered. The only exemptions quoted are for charges:

  • ‘in favour of a landlord on a cash deposit given as security in connection with a lease of land’. Charges relating to rent deposit deeds are therefore excluded.
  • ‘created by a member of Lloyd’s… to secure its obligations in connection with its underwriting business’; and
  • excluded from registration ‘under any other Act.’ This would include charges excluded by the Financial Collateral Arrangements (No 2) Regulations 2003.
  • Pledges and liens over property are also excluded.

A company no longer commits a criminal offence if it fails to register a charge. However, serious consequences can still result, as failure to register a charge that should be registered can ‘void’ the security that it would otherwise give on a company’s property. If in doubt, therefore, it is always prudent to file an MR01 to register the charge, as there are no significant disadvantages to doing so.

 

Is there a deadline for submission of form MR01?

Yes. Applications for registering a charge at Companies House (for newly created charges) must be made within ‘21 days beginning with the day after the date of creation of the charge’.

 

Section 859F of the Companies Act prescribes special circumstances that must apply before a court order can be obtained to extend the 21 days allowed for registration.

 

How is a newly created charge registered?

As an alternative to the traditional paper form MR01 route, it is now possible to file the registration electronically. The benefits of software filing your application are numerous: it is quicker, easier, more secure and if you use Inform Direct, cheaper than the traditional paper filing process. The process is as follows:

  1. Complete form MR01 (or LLMR01 if the charge has been created by a Limited Liability Partnership). You will need to disclose the charge creation date; the name of the person(s) entitled to the charge; a brief description of the charge and answers to some questions about the nature of the charge.
  2. Attach a certified copy of the deed, or document created to support the newly created charge. This must be signed by the charging company (the lender). A PDF version of the deed document can be delivered to Companies House to support a mortgage registration application that has been filed electronically.
  3. Pay the registration fee. Paper filing currently incurs a Companies House fee of £23. Registering a charge at Companies House digitally currently costs £15.
  4. Once the MR01 has been accepted, Companies House will issue a Certificate of the Registration of a Charge. This certificate should be carefully retained as it includes the 12-digit Unique Reference Code that will have been allocated to the charge, and which Companies House will require should you wish to process any updates to the charge in future.

 

Form MR01 - register a charge

Can details be redacted from the copy of the charge deed held on the public record?

Only prescribed, very limited personal information can be redacted from the copy of the charge document held on the public record. The details that can be redacted are:

  • Personal information relating to an individual – other than the name of the individual.
  • The number or other identifier of a bank account of a company or individual.
  • A signature.

 

What are the consequences of failure to register a charge?

Before the Companies Act regime was simplified, failure to register a registrable charge was considered a criminal offence – both by the company, and every officer that could be deemed to have defaulted their responsibility. With the amended Act, registration of a charge is no longer compulsory and criminal responsibility has been removed. However, failure to file form MR01 within the 21 days allowed means that whilst the charge remains due for repayment it is now effectively unsecured. Any security that had been granted over the company’s property or assets when the charge was created is now ‘void’ against any liquidator, administrator or other creditor of the company.

 

When can the time limit for registration of a charge be extended?

An application to the courts to extend the period allowed to file form MR01 is likely to succeed where the failure:

  • ‘was accidental or due to inadvertence or to some other sufficient cause’; or
  • ‘is not of a nature to prejudice the position of creditors or shareholders of the company’.

More broadly, a court order to extend the period of registration will also be granted if to do so is considered ‘just and equitable’.

Note that charges that have been granted an extended period of registration cannot be software filed or web-filed. Instead, a paper form MR01 must be submitted together with the court order permitting the extended period of registration.

 

How do I apply to extend the time allowed to file form MR01?

If a newly created charge is not, or cannot, be registered within the statutory time frame, then an application can be made to the Companies Court to extend the period of registration. The application can be made by the company, the entity that created the charge (i.e. the lender) or any other person that has an interest in the charge – such as a legal or accounting firm acting on behalf of either the chargor or chargee.

A number of steps must be followed in order to obtain the court order allowing extension of the period of registration:

  1. Complete Claim Form (CPR Part 8). You should include on the form an explanation of the circumstances that resulted in the failure to meet the statutory deadline.
  2. Complete a Claim for an Order Extending Time for Registering a Charge. This includes a Witness Statement in Support of the explanation given of the circumstances that resulted in the failure to meet the statutory deadline. For example, explanation that it was due to inadvertence or accident or some other ‘sufficient cause’. Confirmation is required that grant of an extension would not ‘prejudice the position of the creditors or shareholders’ of the company or that an extension represents a ‘just and equitable’ outcome.
  3. Attach a copy of the charge deed to the Witness Statement in Support. The original charge deed must be provided to the Registrar at the application hearing.
  4. Serve a copy of the above documents on the company to whom the charge applies, if the application to extend the period allowed for registration is not being made by them.
  5. Pay a court fee at the time of lodging the application.
  6. Provide evidence of solvency. A director or company secretary of the company to whom the charge applies must sign a statement confirming that:
  • no winding up order has been made against the company or resolution for voluntary winding up of the company been passed;
  • no winding up petition is pending;
  • no notice of a resolution to wind up the company has been given or is planned;
  • the company continues to carry on business;
  • there are no unsatisfied judgments against the company and that no creditor can recover judgment against it.

This signed statement must be filed with the Companies Court no later than two clear working days before the hearing.

Once the above steps have been completed a hearing will take place at the Registrar’s Chambers. Once the court have agreed to the extension they will provide two copies of the order. The charge can now be registered by attaching a copy of the court order to a paper form MR01. Note than applications for registration of a charge, where the time period for registration has been extended, can only be paper filed with Companies House.

How can Inform Direct help you manage company mortgages and charges?

Subscribers with their own Companies House presenter code can use Inform Direct to register, satisfy and release (whether in part or in full) their company mortgages and charges. Inform Direct includes the following specially designed features:

  • Mortgage summary: clearly displaying all the details of your company mortgages and charges.
  • Regular synchronisation with Companies House: ensuring that the details of your mortgages and charges held within Inform Direct are up to date and complete and reflect the public register at all times.
  • Electronic filing: Inform Direct breaks down each process into manageable, simple steps. It ensures you provide the correct details, on the correct form and in the correct format, before submitting the details of your mortgage transaction to Companies House electronically. Whether you are registering a new charge or satisfying/releasing an existing charge, the whole process takes moments.
  • Register of mortgages: Inform Direct provides you with a fully compliant Register of Mortgages and Charges which is automatically updated at the time you process any mortgage or charge transaction.
  • Provision of template documents: When you complete a transaction in Inform Direct, our clever software will suggest relevant template board minutes and resolutions that may be required to support your mortgage transaction and will pre-populate them with the details you have already entered.

Inform Direct makes electronic submission of your application for registration of a charge easy. Benefits include automatic update of statutory registers and professional board minutes prepopulated with the details of your registration.


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