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Sun. Jul 14th, 2024

UK court has ruled that the bond is void for non-registration, despite having a Companies House registration certificate | Cadwalader, Wickersham & Taft LLP

By Vaseline May30,2024

In the recent case of Re VE Global UK Ltd (in administration) (2024) EWHC 749 (Ch)the High Court examined whether a registration certificate issued by Companies House could be regarded as conclusive evidence of the correct registration of securities. The ruling and considerations in this case underline the importance of ensuring that the relevant security submitted for registration is adequately drafted and that the registration process is closely followed.

The case revolved around a bond loan dated December 20, 2021, where a debtor claimed to have provided security in favor of two investors. This bond was not registered with Companies House. In order to further provide this security for the benefit of an additional third party investor, an amendment agreement on the bond loan was subsequently entered into on January 18, 2022. This amendment agreement has been submitted to Companies House for registration without annexing the original bond.

Companies House has issued a certificate confirming the registration of a charge dated January 18, 2022, as created by the charger in favor of the three investors. Under section 859I(6) of the Companies Act 2006, a registration certificate is conclusive evidence that the required documents have been delivered within the prescribed period. Crucially, however, the certificate referred to the date of the amendment agreement, and not to the original bond date.

The High Court held that the bond was void against administrators for non-registration under section 859H of the Companies Act 2006.

In his judgment, Baister J R v Registrar of Companies, ex parte Esal (Commodities) Ltd (1986) 1 QB 1114In the Esal case, the security document in question was delivered too late and as such should not have been eligible for registration; however, in any case, the registrar accidentally and accidentally recorded the charge. Despite these facts, the court ruled that the registration certificate was considered conclusive evidence of registration of an indictment. However, in this case, the registration certificate referred to a charge dated the date of the amendment agreement, and not the date of the original bond. Baister J noted that the variation agreement did not create the charge, but merely expanded the terms of the document, and therefore concluded that the certificate purported to record a charge which did not exist.

Baister J also referred Re Bitumina Industries Ltd (in administration) (2022) EWHC 2578 (Ch). In the Bitumina Industries case, the registration certificate was held to cover the relevant costs as the original security document and registration details were not “entirely different”. However, in this case, Baister J took the view that the original bond and amendment agreement were not sufficiently similar, with the terms of each agreement serving different purposes.

This ruling underlines the importance of rigor when registering security interests with Companies House. It serves as a cautionary tale for clients and clients to ensure alignment between vehicle registration certificates and the underlying safety documents, averting potential legal pitfalls down the road. Ultimately, Re VE Global UK Ltd provides useful clarity on vehicle registration dependence and highlights the need for precision in documenting and recording business security.

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