The commencement of the Companies Act 2014 on 1st June 2015 brought with it a new priority regime for charges as well as new procedures for their registration in the Companies Registration Office.

 

These changes are aimed at creating greater certainty in determining the priority of charges and simplifying the registration of charges.

 

Prior to 1st June 2015, for a charge to be validly registered, the relevant form C1 had to be physically filed in the CRO within 21 days from the date of creation. Critically, it was the date of creation of the charge which determined its priority over any other security registered against the company, and not the date on which it was filed with the CRO.

 

Under the new Act, the date of the creation of the deed of charge no longer determines its priority.

 

Since 1st June 2015, the CRO’s own mandatory e-filing system has been in place, which incorporates electronic (ROS) signatures to determine the priority of a charge by reference to the date and time of receipt by the CRO of a fully filed charge submission.  

 

Not only did the 2014 Act introduce the new mandatory requirement to electronically file details of charges with the CRO, but it also introduced two procedures for the registration of charges.

 

The first is a ‘one-stage’ procedure, which is similar to the old system, in that the required particulars are lodged at some stage not later than 21 days after the creation of the charge, but unlike the old position, priority now runs from the date the particulars are submitted, as opposed to the date of creation of the charge.  

 

The second is a ‘two-stage’ procedure, which facilitates presenters to secure the earliest possible priority date by filing a notice of a company’s intention to create a charge (Form C1A), which must be followed within 21 days by a second form (Form C1B) confirming the creation of the charge. Provided that Form C1B is submitted within the 21-day period, priority will run from the date that Form C1A was submitted, being a point in time before the creation of the charge. Failure to complete the second step will see the first filing rejected.  

 

The net effect is that registration of particulars of a charge will no longer be a perfection issue but will determine priority. In particular, the use of the two-stage procedure will allow a lender to improve the priority of its security. Once the first filing has been made, it now has 21 days to complete the process and will have priority over any other charges registered during that time, including those using the one-stage procedure.