Company Charges

01.01.07

Company Charges

Changes are afoot to the way in which floating charges will be registered in Scotland. Under the Companies Act 1985, a floating charge must be registered with the Registrar of Companies within 21 days of creation if it is to be enforceable against an administrator, liquidator or creditor of a company in insolvency. Similar provisions are contained in the Companies Act 2006 and are expected to come into effect on 1 October 2009.

Under new and separate Scottish legislation, a new Scottish "register of floating charges" is to be created. The legislation provides that a floating charge granted under Scots law (no matter where the company is registered) will be created only on its registration in the Scottish register.

The combined effect of the existing UK and prospective Scots legislation is that a Scottish floating charge will not be valid in the UK against an administrator, liquidator or creditor of the company in insolvency unless it was registered with the Registrar of Companies within 21 days of its registration on the new Scottish register of floating charges. This would result in a double requirement to register a Scottish floating charge.

The government wishes to avoid double registration. It is therefore proposing that charges registered in the new Scottish register will be deemed to have been registered with the Registrar of Companies as well. Provision would also be made for the sharing of information between the Keeper of the Registers and the Registrar of Companies and for changes to the way in which the latter is required to hold information.

The Scottish legislation which will create the new floating charges registers is not yet in force. Consultation on the proposed new registration system closed in September 2007. The government's response, together with draft regulations, are expected to be published in early 2008. We will provide updates in future bulletins.

Bankruptcy and Diligence etc (Scotland) Act 2007

For further information, please contact Alan Knowles 0131 656 0016 / alan.knowles@brodies.com.