If your company borrows money from a bank or lender, you’ll normally have to provide some form of security for the loan. One type of security is a ‘charge’ over assets, such as land or buildings that your business owns. For example, with a mortgage, the lender has a ‘charge’ over the property the mortgage is taken out on.
In some cases the lender or its agent may register a charge automatically; we’ve outlined the steps you need to take if it doesn’t.
What are the different types of charge?
There are two main types of charge that can be used as security against a loan:
Fixed charges: These are attached to specific, identifiable assets such as land, buildings or machinery. Until the loan is repaid, a business cannot sell these without express permission from the charge holder (the lender).
Floating charges: These are held over all of a company’s assets or specific classes of assets that a company can use, transfer and sell in the normal course of business. The value of these assets can change throughout the length of the agreement. Floating charges can include real estate, moveable assets, stock, raw materials, vehicles, property fixtures and fittings, cash, and book debts.
Who can register a charge?
Any person ‘interested in the charge’ can register a charge at Companies House. This could be the owner or an employee of the business, the lender, or the lender’s agent.
Generally, the lender or the lender’s agent will register the charge instead of your company, however if you’re unsure it’s worth checking with them when the agreement is signed.
Step-by-step: how to register a new charge?
All charges need to be registered with Companies House within 21 days - beginning the day the charge is created.
1) Complete the relevant form
You will need to include the charge creation date, the name of the person entitled to the charge and a description of the charge. You’ll also need to answer some questions about the nature of the charge.
You can do this registration electronically if you wish, which may be quicker and cheaper than the paper filing process.
2) Attach a certified copy of the legally binding document
This must be signed by the charging company (the lender) and can be posted to Companies House with your application, or a PDF can be attached electronically to your online application. The uploaded document must be certified as a correct copy of the original.
Any information you send will appear on your company’s public record. This includes all information on the certified copy of the legally binding document. Therefore you are allowed to ‘redact’ some personal information including:
Personal information relating to an individual (but not their name)
The number or identifier of a bank securities account
A signature, including a signature certificate
3) Pay the charge registration fees
It currently costs £15 to do so using the Companies House online Web Filing process. If you choose to post the form, it will cost £23.
4) Companies House issues certificate
Once the MR01 (or LLMRO1) has been accepted, Companies House will issue a Certificate of the Registration of a Charge - this could take around five working days.
The certificate should be kept in a safe place, as it includes a unique 12-digit reference code that you’ll need if you wish to process any updates to the charge in future.
What if I miss the charge registration time limit?
If you don’t send this information to Companies House within the 21-day timeframe, you’ll need to get a court order providing an extension of time.
To apply, you’ll need to complete a CRP Part 8 Claim Form, which should include an explanation of the circumstances that led to the deadline being missed.
You’ll also need to complete a claim for an Order Extending Time for Registering a Charge.
You will need to explain why it wasn’t completed in time, and the form lists several reasons for this, including it being an
- Due to inadvertence (in other words, an oversight) or some other sufficient cause
- Not in the nature to prejudice the position of creditors or shareholders
You’ll also need to include a witness statement - it’s important to be open and honest about the reason.
If you spot a mistake after you’ve sent off your paper forms, then you can sign up for informal correction. This could help you avoid missing the deadline.
You will be able to correct a company number, company name, date of creation, person(s) entitled to the charge, description of the property, fixed charge tick box, floating charge tick box, negative pledge tick box.
Once you’ve submitted the form, you’ll be contacted if more information is needed or any corrections need to be made.
What charges are exempt from registration?
According to the Companies Act 2006 (Amendment of Part 25) Regulations 2013 - the following charges are exempt from registration:
- a charge in favour of a landlord on a cash deposit given as a security in connection with the lease of land;
- a charge created by a member of Lloyd’s (within the meaning of the Lloyd’s Act 1982) to secure its obligations in connection with its underwriting business at Lloyd’s;
- a charge excluded from the application of this section by or under any other Act.
Keeping registered charges up to date
Information on charges registered by UK limited companies and LLPs is available for the public to view free of charge online.
You can find this information by going on Companies House Service and entering the company name, registration number or officer name.
If you own a company, it’s a good idea to review this information periodically to make sure any charges registered are correct and up to date.
You can tell Companies House when a charge has been satisfied - this could be when debt associated with the charge has been paid in full, or in part. It will then update your business’s charge information on public record.
You can also notify Companies House when property has been released from a charge or if it no longer belongs to the company.
How to get help with registering a charge
There is a comprehensive guide to registering a charge using Companies House Online Web Filing too and a video on the government website.
If you need further help, you should speak to your lender - it might be able to register the charge for you.