Companies House

 
 

Rectification of Charges

Part I - Charges created before 6 April 2013

APPLYING TO THE COURT TO RECTIFY THE STATUTORY REGISTER OF CHARGES PURSUANT TO SECTIONS 873 & 888 OF THE COMPANIES ACT 2006

Introduction

One of the most common requests we receive in our Mortgage section is to do with rectifying the particulars of a charge entered onto the register of charges. The majority of these requests arise due to errors made by presenters in submitting incorrect information on the documents delivered to the Registrar of Companies (the "Registrar") (which in most instances will be the MG01 or equivalent, and the instrument of charge).

The Companies Act 2006 (the "Act") confers jurisdiction on the court to order the Registrar to rectify a misstatement or omission in the particulars on the register of charges (Section 873 of the Act for companies registered in England and Wales or Northern Ireland, and section 888 of the Act for companies registered in Scotland).

You should be aware that the court's power under these sections extends only to rectifying particulars on the register of charges. The register of charges forms a discrete subset of the public register. The register of charges is not the same as the public register. When the Registrar receives a properly delivered application to register a charge, he manually extracts and enters the prescribed particulars of charge onto the register of charges. Once the particulars are registered on the register of charges, the Registrar prepares and issues the certificate of registration and places a copy of the certificate and the original filing (the MG01 or equivalent) on the public register. Neither the original filing nor the certificate of registration forms part of the register of charges and the court's jurisdiction under section 873 (or Section 888) does not extend to rectifying defects on either of these documents.

The FAQ's below attempt to deal with the Registrar's position in relation to rectification applications made to the Court pursuant to sections 873 & 888 of the Act. They do not deal with applications to extend the time for the registration of a charge, including Re Charles Orders

1. In what circumstances will I need to make an application to rectify the Register pursuant to section 873/888 of the Act?

If you have registered a charge created by a company pursuant to Part 25 of the Act (or equivalent provisions for Limited Liability Partnerships) and have noticed that the particulars of the charge registered are incorrect then you will need to make an application pursuant to section 873/888 of the Act to rectify them. The particulars of a charge are prescribed by way of regulations [SI 2008/2996] and are as follows:

  • The date of creation of the charge;
  • A description of the instrument ( if any) creating or evidencing the charge;
  • the amount secured by the charge;
  • the name and address of the person entitled to the charge; and
  • short particulars of the property charged.

There may also be occasions where the notification of the satisfaction of a charge has been made in error and an application pursuant to section 873/888 to delete the entries made on the Register will be necessary.

If you are seeking to rectify information registered pursuant to Sections 859K, 859L or 859O of Chapter A1 of Part 25 of the Act (which relates to a charge created before 6 April 2013), then you should make an application under Section 873/888.

2. When should I contact the Registrar of Companies?

You should contact the Registrar as soon as possible with your proposed application in draft (together with a draft Order), so that the Registrar can either approve the application/Order, or suggest amendments which may be agreed between parties.

3. How do I make such an application?

You should consider seeking independent legal advice before making any application to the court. You should also refer to the Civil Procedure Rules 1998 (as amended), with a view to making an application pursuant to Part 8 of these rules.  For further information on the Civil Procedure Rules follow this link www.justice.gov.uk/courts/procedure-rules/civil.

There is also guidance available from Her Majesty's Court Service on making a rectification application at:
www.hmcourts-service.gov.uk/HMCSCourtFinder/GetForm.do?court_forms_id=2262

4. Will I need to add the Registrar of Companies to the application?

Yes, you are advised to add the Registrar as a Defendant to the proceedings because he ultimately will have to amend the Register following the rectification Order made by the court.

5. Will the Registrar consent to the making of the application?

The Registrar does not consent to applications as he feels that rectification relief is discretionary, and the court still has to make a decision based on the evidence before it whether to order rectification. However, as long as the Registrar does not object to the order and there is agreement that no order for costs will be made against him then he will confirm his position to the court in writing.

6. What should my draft Order include?

It is important that the draft order clearly identifies the charge in question, so as to ensure it can be identified. Wording along the following lines is not uncommon in draft orders for rectification relief:

"UPON the Court being satisfied that the misstatement [insert details] was due to inadvertence and that it is just and equitable to grant relief pursuant to section 873/888 of the Companies Act 2006

IT IS ORDERED THAT

1. Upon delivery of an Office Copy of this Order to the Defendant the statutory register of charges for the Claimant relating to a charge dated [                  ] granted by the Claimant in favour of [                     ] and registered by the Defendant on [                          ] be rectified by deleting the words [                       ], and substituting the words [                                ] in their place.

7. Will the Registrar attend any future hearing?

As long as the Registrar is happy to approve the application then he will not attend any future hearing. This is because the Registrar wishes to keep costs to a minimum. However, if novel areas of law are raised by presenters then the Registrar reserves the right to make representations before the court.

8. If the court makes an Order - what should I do then?

You should send a sealed copy of the Order to the Legal section at Companies House, who will check that the Order is acceptable, and will then pass it to a processing section to arrange for the Register to be rectified.

9. How long will it take the Registrar to act upon the Order and amend the Register?

It depends upon workloads within Companies House. You will be advised when we have completed the rectification of the Register.

10. How do I avoid the need to make an application to amend the Register?

You should ensure that the particulars of charge sent to the Registrar for registration are correct. The legislation requires the particulars of the charge to be submitted on a form along with the original deed and a fee. It is always worth double checking that the particulars of the charge within the deed match those submitted on the appropriate Form. You should also ensure that in relation to the satisfaction of a charge these details also reflect the correct position i.e. has the charge actually been satisfied; is it only satisfied in part rather than in full.

11. Where can I find out more information?

You can contact the Mortgage Support section via the Companies House Contact Centre on 0303 1234 500.

Part II - Charges created on or after 6 April 2013

APPLYING TO THE COURT TO RECTIFY CHARGE INFORMATION FOR CHARGES CREATED ON OR AFTER 6 APRIL

As referred to in Part I above, the provisions of sections 873/888 (rectification of Register of Charges) of Part 25 of the Companies Act 2006 (‘the Act”)  continue to apply to charges which are created before 6 April 2013.

The provisions of section 859M (Rectification of Register) of the Act applies to information contained within a statement or notice delivered to the Registrar of Companies in accordance with the provisions of Chapter A1 of Part 25 of the Act in respect of charges created on or after 6 April 2013.

The following are examples of anticipated rectification applications we expect to receive, which are based upon our experiences under the charges regime before 6 April 2013.

Example 1 - Mis-statement of a particular of a charge delivered under section 859A

After registration of a charge, a Presenter realises that a particular submitted on the Statement of Particulars (form MR01), as set out under section 859D is incorrect (e.g. the short description of information delivered pursuant to S859(2)(d) is incorrect). The Registrar has no power to rectify such errors, so the Presenter has an  option to apply to the court to ask for an order that the mis-statement is rectified pursuant to section 859M.

Example 2 - Omission of a particular of charge delivered under section 859A

After registration, a Presenter realises that they have omitted to tick the box on the Statement of Particulars (form MR01) delivered under section 859A, to confirm that a floating charge is contained within the instrument. The Registrar has no power to correct this omission, so the Presenter has an option to apply to the court for an order that the omission is rectified pursuant to section 859M.

Example 3 - Mis-statement of an entry of satisfaction and release delivered pursuant to section 859L

After registration, a Presenter realises that a statement of satisfaction ( form MR04) filed in relation to a charge delivered under section 859L is incorrect. The statement filed confirms that the debt for which the charge was given has been satisfied in full, when it has only been satisfied in part. The Registrar has no power to rectify the error, so  the Presenter has an option to apply to the court to ask for an order that the mis-statement is rectified pursuant to section 859M.

Court Application

The provisions of section 859M allow an application to be made to the court, either by the company creating the charge, or by a person interested in it.  It is our view that the Registrar of Companies should be joined as a defendant  to the claim so that he has an opportunity to consider and comment on the application prior to the hearing. 

Upon the court making an Order for rectification, a sealed copy should be sent to the Registrar.  The Registrar will rectify the error as required by the Order and will then place the Order on the company record so searchers will be able to read it and understand the effect of the rectification.

The guidance within Part I above, namely FAQ's 2 - 11, is relevant to a Section 859M rectification application. However, in FAQ 6, please note that the appropriate section is 859M, and it is the information on the register which will need to be rectified, and not the Register of Charges; and in FAQ 10 the information which is required to be delivered to the Registrar is a statement of particulars ( form MR01), a certified copy of the deed and a fee.

Section 859N

There is also a power under s859N to apply to court to remove and replace an instrument or debenture which has been delivered to the Registrar under Chapter A1.

Where can I find out more information?

If you are contemplating making an application to the court under sections 859M or 859N please contact our Mortgage Support Section via the Companies House Contact Centre on 0303 1234 500.

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