There are various ways (as those of you out there who are owners/managers of a company or business will well know) in which money can be raised to fund the needs of the business. One of the most common ways is by way of a third-party loan.
In exchange for a loan, a lender will usually require that the borrower makes certain promises. More often than not, the lender will also seek to take out security against assets of the borrowing company.
Often a facility or loan agreement will be entered into by the lender and the borrower and a separate instrument will also be entered into that deals with the creation of the security. It is this instrument (often a debenture, but it could also be the CH1 form which registers a mortgage over a registered estate) which must be registered against the company at Companies House with the appropriate form – called an MR01 (and a fee, of course).
What are the consequences if the charge isn’t registered at Companies House? A reminder email to force you into action? A slap on the wrist? Not quite. If the charge isn’t registered at Companies House within 21 days from the day after the charge was created, the charge will be void against a liquidator, administrator or creditor, meaning that if the company goes under, other creditors who have registered their charges will be higher on the priority list than the lender in this case. It may be that by the time the priority creditors have been paid, there is not enough money left to pay this lender, rendering the charge potentially worthless.
This inevitably makes the filling out and sending of the MR01 a critical and potentially stressful endeavour. It is therefore paramount that you seek legal help in registering a charge.
Unfortunately, there isn’t any way around the short deadline, but stress levels can be reduced with the use of online filing through the company’s authentication code. If your company does not currently have one, we very much recommend that you get one. (In addition to the MR01, there are plenty of other filings that we would be able to file for you online.) The upside for your purposes is that online filings are usually processed within 24 hours. This means that if there are any unforeseen issues with the MR01, we will have enough time within the 21-day deadline to resubmit the charge for registration for you. Companies House is quite a bit slower when it comes to paper filings. Processing paper documents is usually a week behind if not more, not leaving much margin for error.
If you would like assistance with filling in and submitting your MR01 form (or in relation to the loan transaction giving rise to it) or for company secretarial services in general, please call Hannah Balameh on 01825 744494 or the Corporate Team on 01825 761555. Alternatively you can email HannahBalameh@rixandkay.co.uk.