Reforming the law of security

Reforming the law of security

What next for the law of security in England and Wales? Louise Gullifer, barrister, professor of commercial law at the University of Oxford, and executive director of the Executive Committee of the Secured Transaction Law Reform Project, explains the need for law reform.

Where are we now with reforming the law of security?

There have been several reports in the UK recommending reform of the law of secured transactions. The most recent was the work done by the Law Commission culminating in a report in 2005 (LC296), which recommended a scheme based on the Personal Property Security Acts in Canada and New Zealand, though more limited in scope. These recommendations were not enacted, but since then there have been some reforms to the law relating to registration of company charges.

First, overseas companies are no longer required to register charges created over their UK property at Companies House, but are required to keep a register of certain charges if they have an establishment in the UK (the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009, SI 2009/1917 as amended by the Overseas Companies (Execution of Documents and Registration of Charges) (Amendment) Regulations 2011, SI 2011/2194).

Second, a new registration regime has been introduced by the Companies Act 2006 (Amendment of Part 25) Regulations 2013, SI 2013/600. All charges are now registrable unless specifically exempt, and electronic registration is now a possibility. These reforms, however, are still narrow in scope.

The Secured Transactions Law Reform Project is looking at the need and shape of future reform much more widely. We are taking, as our starting point, the Law Commission’s consultative report (CP176), which sets out a scheme based on the Saskatchewan and New Zealand Public Sector Accounting Standards (PPSAs). The working groups of the project are examining four areas of secured transactions law:

  • registration
  • priorities
  • insolvency, and
  • financial collateral

Work is still in progress in assessing both the need for reform and what form reform should take, although it has become apparent that there are particular areas causing concern in the lending market. Two of these

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