Q&As

A legal charge over property was registered at Companies House. Form MR01 did not say that there was a negative pledge, when there was actually a negative pledge in the document. Form MR01 with the mistake was approved and added to the register at Companies House. The charge was registered correctly with the Land Registry. Does the Companies House error need to be corrected by court order or is the charge enforceable with the error?

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Published on LexisPSL on 23/10/2019

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • A legal charge over property was registered at Companies House. Form MR01 did not say that there was a negative pledge, when there was actually a negative pledge in the document. Form MR01 with the mistake was approved and added to the register at Companies House. The charge was registered correctly with the Land Registry. Does the Companies House error need to be corrected by court order or is the charge enforceable with the error?
  • Validity of security
  • Priority of security

In this Q&A, it has been assumed that the relevant security was created after 6 April 2013. If it was created before that date, a different statutory registration regime will apply, though the principles referred to below are broadly similar in both the pre and post 6 April 2013 regimes.

Two issues should be considered in relation to the error in completing Form MR01 as regards the existence of a negative pledge. The first is validity of security and the second is priority of security.

Validity of security

The combined effect of sections 859A and 859H of the Companies Act 2006 (CA 2006) is that (subject to certain exceptions) a charge created by a UK registered company must be registered at Companies House within 21 days of creation, failing which, the charge will be void as against a liquidator, administrator or creditor of the company. CA 2006, ss 859A(2) and 859D provide that the registration of the charge is effected by delivery (among other things) of a ‘section 859D statement of p

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