In your company’s journey, there may arise occasions where borrowing money becomes necessary. This could be for acquiring property, significant equipment, or even a company vehicle. Understanding charges is crucial in such scenarios.

In this post, we delve into everything essential about registering a charge: defining what a charge entails, exploring its various types, identifying who can register one, understanding registration deadlines, and more. Let’s begin.

What is a charge?

A charge serves as a form of security that a company offers to a lender.

The charge typically involves an asset, granting the lender the right to seize that asset and its sale proceeds if the company fails to fulfill its obligations under the loan agreement.

In essence, the lender can recover the loan by taking possession of and selling the specified asset or assets.

For instance, a mortgage can be viewed as a type of charge. In such a case, if the borrower defaults, ownership of the property may transfer to the lender.

Who is responsible for registering a charge with Companies House?

There is no specific individual or entity designated to register a charge.

According to Companies House guidelines, it can be anyone ‘interested in the charge’. This typically includes:

• The company itself (the borrower)
• The lender
• An agent acting on behalf of the lender

How to register a charge with Companies House

You can register a charge with Companies House using either WebFiling (£15 per charge) or by submitting the ‘MR01 Particulars of a charge’ form via paper (£24 per charge).

Registering online is typically faster than using the paper form.

For the paper method, the process is identical for companies, lenders, and lenders’ agents.

When using WebFiling, the process is mostly the same for companies, lenders, and lenders’ agents. The only variation lies in the specific information required upon logging into WebFiling.

To register a charge online as the company you will need:

To successfully register a charge via Companies House WebFiling, you will need:

• A Companies House WebFiling account (register if you don’t have one)
• The company’s jurisdiction
• The company’s authentication code
• The company name and number
• The date the charge was created
• The full name(s) of the lender(s) or ‘person(s) entitled to the charge’
• A comprehensive description of the charge
• Specific details about the nature of the charge (fixed or floating)
• A certified copy of the written instrument in PDF format

To register a charge online as the lender (or agent) you will need:

To register a charge electronically with Companies House using WebFiling, you will need the following:

• A Companies House WebFiling account (register if you don’t have one)
• The company’s jurisdiction
• A lender authentication code (obtainable through the ‘Application to register as a lender – for filing electronic charge documents’ form)
• A presenter authentication code (also obtained through the same form)
• The company name and number
• The date the charge was created
• The full name(s) of the lender(s) or ‘person(s) entitled to the charge’
• A detailed description of the charge
• Specific information about the charge type (fixed or floating)
• A certified PDF copy of the written instrument

Upon submission, Companies House will acknowledge receipt within two days. Approximately five days after acceptance, you will receive a Certificate of the Registration of a Charge, containing the company number, charge code (a unique identifier assigned by Companies House), charge creation date, and company name.

What is the deadline for registering a charge?

As per the Companies Act 2006, you must submit your application to register a charge at Companies House within ’21 days beginning with the day after the day on which the charge is created’.

Missing this deadline requires obtaining a court order to extend the registration window for the charge.

Fixed and floating charges

There are two different types of charges, fixed charges and floating charges:

Fixed charges

This type of charge is specific to an asset or group of assets that the company cannot sell without permission from the lender or until the loan has been fully repaid.

Examples of assets under a fixed charge include land, property, and vehicles.

Floating charge

This type of charge typically covers all of the company’s assets as a whole. Floating assets, such as movable property, can fluctuate in value unless the company breaches its loan agreement or goes into insolvency, at which point the charge “crystallises” and becomes fixed.

Examples of assets under a floating charge include stock, raw materials, and debtors.

Fixed charges are generally favored by lenders because their value remains stable and they take priority over floating charges in case of the company’s insolvency (floating charges rank behind other creditors like employees).

In contrast, companies typically prefer floating charges as they allow borrowing even without substantial assets.

Do all charges need to be registered with Companies House?

The vast majority of charges should be registered with Companies House, although there are specific exceptions outlined in the Companies Act 2006 (Amendment of Part 25) Regulations 2013. These exceptions include:

• A charge in favor of a landlord on a cash deposit given as security for a lease of land.
• A charge created by a member of Lloyd’s to secure obligations related to its underwriting business at Lloyd’s.
• Charges excluded from registration under another Act.

In general, there is little downside to registering a charge. Therefore, if there is any uncertainty, it is advisable to proceed with registering all charges.

It’s important to note that failing to register a charge is no longer a criminal offense. However, not registering a charge can still have significant implications for all parties involved.

What is a charge instrument?

The charge instrument is the legally binding document that outlines the agreement between the company and the lender, such as a mortgage deed. When registering the charge, you must provide a certified copy of this charge instrument.

Is a charge publicly available information?

Yes, anyone can freely and easily see if a company (or lender) has registered a charge, via the Companies House public register.

You can locate a charge by following the steps below:

1. Enter the company name on the ‘Search the register tool’
2. From the list of results, click on the correct company name
3. Click on the ‘Filing history’ tab
4. Select the ‘Charges’ tick box
5. A list of charges will be presented (if there are any)
6. Click on ‘View PDF’ next to the charge for full information, including a copy of the charge instrument

Is it possible to withhold sensitive information relating to the charge from the public register?

As demonstrated, accessing information about the charge is straightforward. However, before submitting the charge instrument to Companies House, you are allowed to redact specific details. You may remove:

• Personal information about an individual (except their name), such as date of birth or residential address
• Signatures
• Bank account numbers and other account identifiers

So there you have it…

We trust you now have a comprehensive understanding of charges and how to register them with Companies House.

Thank you for reading this article. If you have any questions, please feel free to leave a comment, and we’ll respond promptly.

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