- Registration of Charges with MCA
- Creation of Charge
- Registration of Charge
- Registering a charge (mortgage) for a company
- 21-day time limit
- Certified copy of the charge instrument
- Who can register a charge
- If you’re the company
- If you’re an agent or lender
- Video: How to register a charge online
- What you can file online
- Other charges you can file
- Satisfy a charge (MR04)
- Video: How to satisfy a charge online
- Older charges
- Registering security in the British Virgin Islands
- Private register of charges
- Public register of charges
- Variations and release of a registered charge
- Share register notations
- What is a company’s register of mortgages and charges?
- What details does the register of mortgages and charges contain?
- Who normally looks after the register of mortgages and charges?
- When should the register of mortgages and charges be updated?
- What mortgage and charge details must a company keep by law?
Registration of Charges with MCA
When a company is financial assistance, or working capital finance as loan or debt, the bank or financial institution requires security (i.e., property, vehicle, etc.,) for the loan provided.
If a proper security is created over the assets of the company, then the bank or financial institution can take possession of the assets secured and conduct sale, to repay the loan. The Companies Act, 2013 requires all companies to file the requisite particulars with the ROC for all security created over the assets of the company.
The process of creating a security over assets of the company is referred to as registration of charges or creation of charges. In this article, we look at all aspects of charge registration in a company.
A charge on a company is a right created by a company “the borrower” on its assets and properties, present and future, in favor of a financial institution or bank “the lender”.
Most companies and LLPs borrow from banks and financial institutions to finance their short-term and long-term capital requirements.
To secure the funds lent to the company, banks use a number of legal documents loan agreements, hypothecation agreements, mortgage deeds, etc., to lay out the terms of the loan and ensure repayment with interest as per schedule.
Companies and LLPs have the ability to borrow from a number of banks or financial institutions their financial requirements, therefore it is then important to track the assets pledged to the bank(s) and the loans provided to ensure security for the lenders.
In this aspect, the creation of charges over the assets of a company helps lenders know the lenders of the company and the assets pledge to the lenders – thereby avoiding double financing.
The charges on a company is public information and can be found in the MCA website.
Creation of Charge
The process for creation of charge begins with passing of a board resolution by the Board of Directors of the Company for availing loan from the lender and includes execution of relevant loan documents or deeds.
Once, the borrower and the lender agree on the terms and conditions of the loan or financial assistance, they both sign on the loan document and other relevant paperwork.
Once, the loan documents are signed, the charges over the properties of the company have been created.
Registration of Charge
Once a charge is created, it becomes the responsibility of the company to register those charges with the Registrar of Companies, along with the documents, that create a charge over the company.
As per the Companies Act, 2013, the following charges created on a company must be registered with the Registrar of Companies.
- A charge created for the purpose of securing any issue of debentures or deposits;
- A charge on uncalled share capital of the company;
- A charge on any immovable property, wherever situated, or any interest therein;
- A charge on any book debt of the company;
- A charge, not being a pledge, on any movable property of the company;
- A floating charge on the undertaking or any property of the company including stock-in-trade;
- A charge on calls made but not paid;
- A charge on a ship or any share in a ship;
- A charge on intangible assets, including goodwill, patent, a license under a patent, trademark, copyright or a license under a copyright.
Registration of charges of a motor vehicle is not mandatory, unless required by the lender. Further, in case of non-registration of charges, a disclosure must be made in the balance sheet of the company.
The time period for registration of charge with the ROC is thirty days of creation of a charge. A filing of registration of charge can be made upto three hundred days from date of creation of charge, provided relevant explanation and applicable fee is paid for late filing of registration of charges.
If an application is made for registration of charges to the ROC in the prescribed format and the ROC is satisfied with the application, then a certificate of registration of charge would be issued by the ROC. The charge created on the assets of the company can be also be viewed online on the MCA website.
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Registering a charge (mortgage) for a company
A ‘charge’ is the security a company gives for a loan. For example, a mortgage is a type of charge.
You can send us the details of a charge created by the company. We’ll then register the charge on the company’s public record.
21-day time limit
If a charge is not registered within 21 days, it may be difficult to recover the debt if the company becomes insolvent. The 21 days start the day after the charge is created.
If you do not send us this information in time, you’ll need a court order to register the charge.
Only the court can allow an extension of time.
Certified copy of the charge instrument
If there’s an ‘instrument’ such as a mortgage deed, you must include a certified copy of the instrument when you register the charge. This will be shown on the company’s public record.
Any information you send us will appear on the company’s public record. This includes all information on the certified copy of the instrument.
Before you send us your certified copy, you can remove or ‘redact’ some personal information from it. You can remove:
- personal information relating to an individual (but not their name)
- the number or identifier of a bank or securities account
- a signature
It’s up to you how you choose to remove this information.
Who can register a charge
Any person ‘interested in the charge’ can register a charge at Companies House. This could be the company itself, the lender or their agent.
This is the quickest and most efficient way to register your charge, and has inbuilt checks to help you file correctly. If you don’t already have an online account with us, you’ll need to sign up for online filing.
You can also send us charge information using third-party software.
If you’re the company
You can register charges against your company using your company authentication code.
If you’re an agent or lender
You can apply for a lender authentication code (LAC).
Companies House will create a LAC, a presenter ID and a presenter authentication code. You can register charges against a company using these details.
Video: How to register a charge online
How to register a charge online
You can watch our video guidance on how to register a charge online with captions on (4m 54s).
What you can file online
You can use online filing to:
- register a new charge created by an instrument (MR01)
- register a charge over property acquired (MR02)
- satisfy a charge that’s been paid in full or in part (MR04)
- tell us about property released from the charge, or no longer belonging to the company (MR05)
Other charges you can file
You can use our paper forms to register other types of charge, or alter a charge you’ve previously registered.
See our full list of company charge forms for information on what you can send us by post. There’s a fee of £23 to register a charge on paper.
There are separate paper forms for LLPs.
Satisfy a charge (MR04)
A charge is ‘satisfied’ when it’s paid off. You do not have to tell us, but any satisfied charges left outstanding on our records could have a negative effect on your company.
It’s a good idea to make sure any charges registered against your company are correct and up to date. You can check your company’s record for any outstanding charges using our free service.
You can tell us when a charge has been paid in full, or part-paid. We’ll then update your company’s charge information on the public record.
You can also tell us when property has been released from a charge, or if it no longer belongs to the company.
This is the quickest and most efficient way to send us information, and has inbuilt checks to help you file correctly. You can also use third-party software, or send us a paper form by post.
Video: How to satisfy a charge online
How to satisfy a charge online
You can watch our video guidance on how to satisfy a charge online with captions on (2m 20s).
You can sign up for informal correction if you want us to correct certain mistakes on your paper form before we register or reject your charge information. This could help you avoid missing your deadline.
Once you’ve signed up, we’ll contact you if we need:
- more information
- permission to make a correction
To register a charge created before 6 April 2013, you must use one of the older charge forms available on the National Archives’ website.
Registering security in the British Virgin Islands
18 November 2020
All companies incorporated in or continued into the British Virgin Islands («BVI») are governed by the BVI Business Companies Act (the «Act»). BVI companies regularly provide security over their assets as part of financing transactions.
Although there are no filing or registration requirements in the BVI which affect the validity of a charge, the Act provides a robust security registration system that enables a secured party to register a charge and secure its priority.
When a BVI company creates a security interest over its assets there are two different registrations which need to be considered:
- the private register of charges, maintained by the BVI company (or its registered agent) at its registered office under section 162 of the Act; and
- the public register of charges, maintained by the Registrar of Corporate Affairs (the «Registrar») under section 163 of the Act.
Private register of charges
Section 162 of the Act requires all BVI companies to maintain a register of all relevant charges created by the company, showing:
- if the charge is a charge created by the company, the date of its creation or, if the charge is a charge existing on property acquired by the company, the date on which the relevant property was acquired;
- a short description of the liability secured by the charge;
- a short description of the property charged;
- the name and address of the trustee for the security or, if there is no such trustee, the name and address of the chargee;
- unless the charge is a security to bearer, the name and address of the holder of the charge; and
- details of any prohibition or restriction, if any, contained in the instrument creating the charge, on the power of the company to create any future charge ranking in priority to or equally with the charge.
A copy of the register of charges must be kept at the company's registered office or at the office of the registered agent of the company. As it is a private register details of the charges will not be disclosed on a company search (details of the charges will only be disclosed in a certificate of incumbency/registered agent's certificate).
If a company's private register of charges is kept at the office of its registered agent and a change occurs in the relevant charges or in the details of the charges required to be recorded, the company must provide the registered agent with details of the change within 14 days of the change occurring.
There is no deadline for updating the private register of charges, however failure to comply with the obligation set out in section 162 of the Act is an offence and is liable on summary conviction to a fine of US$5,000.
Public register of charges
Section 163 of the Act provides for the creation of a public register of charges by filing an application to register a relevant charge with the Registrar. It is not mandatory for a company to file such an application and failure to do so will not affect the validity of the security created by the charge.
A secured party should, however.
insist upon this registration as it is the public register of charges (rather than the private register of charges created pursuant to section 162 of the Act) which determines priority of security under BVI law: charges which are registered in accordance with section 163 of the Act take priority over those which are not registered. Charges which are so registered also have priority over charges which are subsequently registered (subject to any intercreditor arrangements which have been entered into) other than registered floating charges which will rank behind a subsequently registered fixed charge (unless the floating charge contains a prohibition or restriction on the power of the company to create any future charge ranking in priority to or equally with the charge). Please note that a different priorities regime applies in respect of BVI companies incorporated under the International Business Companies Act («IBC Companies»).
Please contact us for further information should your transaction involve security granted by, or over the assets of, an IBC Company.
An application to register a charge with the Registrar is made by filing an application specifying the particulars of the charge, in the approved form and may be made by:
- the company or a legal practitioner in the BVI authorised to act on its behalf; or
- the chargee or a legal practitioner in the BVI authorised to act on its behalf or the registered agent of the company.
Once the Registrar is satisfied that all registration requirements have been complied with it will register the charge on the BVI company's public register. and will issue a certificate of registration of the charge, confirming the date and time of the registration. This certificate provides conclusive proof that the registration requirements of the Act have been complied with.
The public register of charges will be available for public inspection and will be disclosed in any company search carried out in respect of the company.
As is the case for the private register of charges maintained under section 162 of the Act, there is no deadline for updating the public register under section 163 of the Act.
However, as priority of the security is determined the date and time of the public filing with the Registrar, this filing should be completed immediately to minimise the risk of a subsequent competing charge taking priority.
Variations and release of a registered charge
Where there is a variation in the terms of a charge registered on the public register of charges, an application for variation of the charge should be filed with the Registrar.
Where a charge is to be released, a notice of satisfaction or release should be filed with the Registrar.
Share register notations
The Act allows for security to be created over shares in a BVI company, provided that the security document:
- is in writing;
- is signed by. or with the authority of, the security giver; and
- clearly indicates the intention to create security over the shares and the amount secured (or how the amount is to be calculated).
Although not strictly a form of security registration, where security has been granted over shares of a BVI company, a properly advised secured party will require the BVI company to make an annotation on its register of members confirming:
- that the shares are charged;
- the name of the chargee; and
- the date on which the statement and name were entered in the register of members.
The making of such an annotation on the register of members is not mandatory and does not have any specific statutory effect, however the making of such an annotation will give actual notice of the security interest to any person who views the register of members and there is a strong argument that such an annotation would provide constructive notice of the security interest to any person dealing with the shares.
It is common for a secured party to demand that the annotated register of members be filed with the Registrar, the effect of which is to make the register of members available for public inspection and therefore increase the range of persons with actual notice of the security interest.
Once a BVI company has filed its register of members with the Registrar it is bound by the contents of this public register of members. The Registrar must be notified of any changes to the company's register of members (e.g. any future share issues, transfers, redemptions etc.) and each time a change is made the company must file an updated register of members with the Registrar.
This obligation continues until the company files a notice confirming that it will no longer maintain a public register of members (which usually requires the secured party's consent).
Once this notice has been filed, the company will not have to notify or provide the Registrar with an updated register of members – it is only required to maintain and update its private register of members.
It should be noted that any register of members that has been filed with the Registrar will remain a public, albeit historical, document and it cannot be removed from the company's records.
Please note that this briefing is intended to provide a very general overview of the matters to which it relates. It is not intended as legal advice and should not be relied on as such. © Carey Olsen 2020
What is a company’s register of mortgages and charges?
Many companies choose to keep a register of mortgages and charges. It helps to keep track of current obligations and allows a company to quickly answer queries arising on audit, or from other third parties.
The charges register is an internal company-maintained register and should not be confused with the public record maintained by Companies House.
Following implementation of The Companies Act 2006 (Amendment of Part 25) Regulations 2013 almost all charges must now be registered with Companies House for inclusion on this public record.
For further details refer to our guide on registering a charge at Companies House.
What details does the register of mortgages and charges contain?
There is no statutory guidance as to the details that should be included when a company decides to maintain this register internally. However, a register of mortgages and charges would normally include some or all of the following details:
The charge code is a number allocated to the charge by Companies House when they register it for inclusion on the public record. If the charge was registered before April 2013 the charge code allocated would have been given a simple sequential number, such as ‘1’, ‘2’, ‘3’, etc.
Charges registered with Companies House since April 2013 are allocated a charge code that is constructed from the company number plus ‘000’ followed by a sequential number. For example, ‘081238560001’ followed by ‘081238560002’ for the subsequent charge.
The charge code can be found on the certificate of registration issued by Companies House when they register a charge.
This is the date that the original written instrument was created. It may be the date the charge came into effect; the date of delivery of the deed; the date of execution or the date recorded in the Register of Sasines or Land Register of Scotland.
This is the date the charge was registered with Companies House.
This would normally entail a brief description of the nature of the charge. For example, ‘Mortgage’, ‘Debenture’, ‘Legal charge’ or ‘Assignment by way of security’.
The chargee name refers to the name of the person(s)/institution(s) that the charge is drawn up in favour of (i.e. the lender).
The amount covered by the written instrument or charge document.
A short description to indicate the current status of the charge. For example, ‘Outstanding’, ‘Satisfied’, ‘Released’, ‘Part satisfied’ or ‘Part released’.
A template register of mortgages and charges, which can be produced free using Inform Direct online company secretarial software is shown below:
When the directors do decide to maintain a charges register, this would normally be kept together with the other registers, which in most cases will be at the company’s registered office address.
It is possible to hold the register of mortgages and charges (or indeed any of the company’ registers) at an alternative location, known as the Single Alternative Inspection Location (SAIL), but this alternative address must be reported to Companies House.
Who normally looks after the register of mortgages and charges?
Maintenance of the charges register is a task that normally falls to the company secretary, or if the company has not appointed anyone to this role, to the directors or finance officer.
The majority of companies have few mortgages and charges, and these usually represent medium to longer term commitments that do not change frequently.
However, for companies that have multiple mortgages and charges, keeping an up to date register is essential for effective internal administration – but it can be a time-consuming chore. Some companies may consider outsourcing this task, but the costs of doing so can be considerable.
For these companies, using software Inform Direct can reduce the workload considerably, as the charges register is automatically updated by the system each time a new charge is added or any changes are made to an existing charge.
When should the register of mortgages and charges be updated?
Whilst there is no statutory requirement to maintain an up to date charges register, for effective internal housekeeping it should be updated in each of the following circumstances:
- Registration of a new charge.
- Part-release of an existing mortgage or charge.
- Part-satisfaction of an existing mortgage or charge.
- Full release of an existing mortgage or charge.
- Full satisfaction of an existing mortgage or charge.
- Change of details for an existing mortgage or charge.
Using Inform Direct it is easy to keep your charges register up to date for all of the above changes. Each time you use Inform Direct to report the change to Companies House, the system automatically updates your register of mortgages and charges at the same time.
The register is synchronised with details held by Companies House and will automatically include the details of all charges held on the public record.
You can also manually add the details of historic mortgages, created, and satisfied or released before 1st January 1987 (before Companies House started to maintain a public record of these details).
What mortgage and charge details must a company keep by law?
Following changes that came into effect on 6th April 2013 companies are no longer required to maintain a charges register. However, Part 25 of the Companies Act 2006 does require companies to keep important charge related documents available for inspection at the registered office or SAIL address:
Part 25, Section 859P Companies Act 2006
Companies to keep copies of instruments creating and amending charges