Status: This project is complete. We await the Government's response to our recommendations
Companies often grant charges and other security interests over their assets to secure loans. This project looked at how such security interests should be registered. It also considered how to resolve conflicts between different secured lenders and between lenders and buyers.
The project
We presented to Government our final report on this project on 31 August 2005. In our report, we recommended:
- a new online system to register charges cheaply and instantaneously
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lenders will only be required to send brief details of the charge - not the documents themselves. Companies House staff will no longer check through lengthy paperwork
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the 21-day time-limit for registration will be removed, and it will be possible to register in advance of the transaction
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a simpler system of priority rules, based on 'the first to register' principle, and
- Companies House and the Land Registry will share information, so properties will need to be registered only once.
Our report also recommended extending the scheme to the sale of receivables, such as factoring. At present, a factor can only be sure of its priority if it writes to each account debtor. In future, it will be able to secure its position more cheaply and easily by registering with Companies House.
The final report followed a Consultation paper, in July 2002 (Law Com No 164) and a Consultative Report, in August 2004 (Law Com No 176).
Implementation
In July 2005 the Department of Trade and Industry (DTI) published a consultation paper about our scheme, which elicited both support and opposition. The Government decided not to include specific powers to implement our recommendations in the Company Law Reform Bill, which was introduced into the House of Lords on 1 November 2005.
The Government has not yet reached a final decision on whether to accept our recommendations. We have been told that discussions will continue with interested parties about the merits of the proposals.
