{"id":7149,"date":"2020-01-26T10:08:26","date_gmt":"2020-01-26T10:08:26","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=7149"},"modified":"2024-05-01T00:35:52","modified_gmt":"2024-04-30T23:35:52","slug":"how-to-register-a-charge-at-companies-house","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/how-to-register-a-charge-at-companies-house\/","title":{"rendered":"How to register a charge at Companies House"},"content":{"rendered":"
\n Last updated: 1 May 2024<\/strong>\n <\/div>\n \n

When a company borrows money from a bank or other type of lender, the company will normally have to provide the creditor with some form of security (i.e. collateral) for that loan. One of the most common types of security is a \u2018charge\u2019 (such as a mortgage) over assets like land or buildings.<\/p>\n

With limited exceptions, a company is required to register a charge at Companies House within 21 days. Below, we explain how to do this.<\/p>\n Set up a limited company \u2013 and keep your home address private<\/span><\/a>\n \n

Different types of charges<\/h3>\n

There are two different types of charges used as security on a loan: fixed charges and floating charges. It depends on the type of loan and lender. Both fixed and floating charges are classed as secured loans, providing protection to lenders. If a company is unable to pay back the loan or it becomes insolvent, the lender can repossess and sell the secured assets in order to recoup the loan.<\/p>\n

Fixed charges tend to be favoured by lenders because they are attached (\u2018fixed\u2019) to specific assets and are prioritised above floating charges in the event of a company\u2019s insolvency, even if a fixed charge and floating charge exist over the same asset. Floating charge holders also rank behind other preferential creditors like company employees and insolvency practitioners.<\/p>\n

Fixed charges<\/h4>\n

Fixed charges are attached to specific, identifiable assets, including land, buildings, vehicles, fixed plant and machinery, and trade fixtures. With a fixed charge, the company cannot dispose of the specific secured asset without express permission from the charge holder (i.e. the lender). The types of financial arrangements that are often subject to fixed charges include mortgages, leases, bank loans, and invoice factoring arrangements.<\/p>\n

Floating charges<\/h4>\n

Floating charges are held over all of a company\u2019s assets, or specific classes of assets, that a company can use, transfer, and sell in the normal course of business, as long as the company is solvent. The value and quantity of these types of movable assets can, therefore, change periodically throughout the duration of the financial agreement.<\/p>\n

Floating charges may be held over real estate and movable assets, both current and future, including stock, raw materials, vehicles, property fixtures and fittings, cash, book debts (money owed to the company), and work in progress.<\/p>\n

Whilst floating charges are fluid in nature when a company is solvent, they \u2018crystallise\u2019 if the borrower defaults on the loan agreement, is wound up, or enters insolvency. When this happens, the floating charge becomes a fixed charge and attaches to the secured asset(s), which means that the company is no longer free to use or dispose of the asset(s) without permission from the lender.<\/p>\n Take the stress out of filing deadlines with our Confirmation Statement Service<\/span><\/a>\n \n

Register a charge at Companies House<\/h3>\n

To register a charge<\/a> that is created or evidenced by an instrument on or after 6th April 2013, form MR01<\/a> (form LL MR01<\/a> for LLPs) must be completed and delivered to Companies House online or by post within 21 days, beginning the day after the charge is created. For example, a charge created on 01\/06\/2023 must be delivered by 22\/06\/2023.<\/p>\n

To complete form MR01, you will need to provide the following details:<\/p>\n