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Registration of Debentures
A constant source of difficulty in company law is the failure of a company to register debentures either properly, or within time. A debenture is a charge over the assets of a company, much as a building society mortgage is a charge over your house. Because companies are more complicated than houses, debentures are similarly more complicated.
We will normally draft a debenture so that it is executed by the client company but delivered to us undated. The form is designed to allow this. We will also ask one of the directors of the company to sign the appropriate form (form 395) and deliver this to us, so that we can register the charge.
When everything appears to be in order, we will agree the date on the debenture and notify the client company of the date inserted. At that point the deed becomes effective.
The debenture must then be registered at Companies House within 21 days. If not so registered, the debenture becomes void.
Over recent years, Companies House have become more and more particular, some might say picky, about the Form 395. It is not uncommon for the application to register to be rejected. If so, it has to be resubmitted, still within that original 21 days. It is therefore vital that the documentation be prepared very carefully, and very precisely, and second that it must be sent to Companies House on the day it is deemed executed.
Clients must also remember that the Charge or debenture must be immediately entered in the company's register of debentures, and that a copy of it must be available for inspection at its registered office.
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