Registration of charges

You take a home loan and the bank keeps the flat as security until you finish paying. A company does the same thing on a bigger scale: it borrows against its factory, its stock or its receivables. Now imagine a second lender who lends to the same company later, not knowing the assets are already pledged to someone else. Who gets paid first if the company collapses? Chapter VI of the Companies Act 2013 answers by making the charge public: register it, or it stops counting when it matters most.

In two minutes

A company that creates a charge on its property or assets must register it with the Registrar within the time the Act allows, because an unregistered charge is ignored by the liquidator and other creditors, although the debt itself stays payable.

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