Download The Company Charge Register after the Companies Bill 2012

Secured Lending: Changes in the
Companies Bill 2012
The Companies Bill 2012
July 3 2014
Dr Mary Donnelly, Law Faculty, UCC
Transition to Reform
Outline
 Removal of Ultra Vires – implications for lenders
 Assistance in financing purchase of own shares
 Loans etc to Directors
 The Summary Approval Procedure
 The Companies Register and Priorities
 Some changes at Seanad stage
Removal of Ultra Vires
Private Company Limited by Shares
[N]otwithstanding anything in its constitution a
company shall have, whether acting inside or outside
of the State –
(a) full and unlimited capacity to carry on and
undertake any business or activity, do any act or
enter into any transaction, and
b) for the purposes of paragraph (a), full rights,
powers and privileges.
CB: s. 38
Finance Assistance in Acquisition of
Own shares
Prohibition
It shall not be lawful for a company to give any
financial assistance for the purpose of an acquisition
made or to be made by any person of any shares in
the company, or, where the company is a subsidiary,
in its holding company: s. 82(2)
Removal of in connection with
Consequences:
Transaction is voidable at the instance of the
company against any person (whether a party to the
transaction or not) who had notice of the facts which
constitute such contravention.
General Exemptions
 Where
 The company’s principal purpose in giving the assistance is not
to give it for the purpose of acquisition; or
 The giving of the assistance for the acquisition is only an
incidental part of some larger purpose of the company
 The assistance must be given in good faith in the interests of
the company.
Specific Exemptions
 Largely similar to Current
 Differences in Detail
Loans to Directors
 Largely unchanged
 Some changes of detail
 De minimis
 Applicability of Summary Approval Procedure
Summary Approval Procedure
Statutory Declaration
30 days
Special Resolution
12 months
30 days -12 months
Transaction
21 days
Delivery of Statutory Declaration to Registrar
Contents of Declaration
 The circumstances in which the transaction or arrangement is to be





entered into
The nature of the transaction or arrangement
The person/s to or for whom the transaction or arrangement is to be
made
The purpose for which the company is entering into the transaction or
arrangement
The nature of the benefit which will accrue to the company directly or
indirectly from entering into the transaction or arrangement and,
That that declarants have made a full inquiry into the affairs of the
company and that, having done so, they have formed the opinion that the
company, having entered into the transaction or arrangement will be
able to pay or discharge its debts and other liabilities in full as they fall
due during the period of 12 months after the date on which they enter
into the transaction/arrangement.
Possibility of Court Application
Arises unless 90% in
nominal value of each class of
issued share entitled voted in
favour
Changes in Registration and Priorities
Requirement to Register
 Applies to
 Charges created after commencement
 Existing Charge on Property Acquired
 Judgment Mortgage
 Retention of Sanction of Invalidity: s. 409(1)
 But provision for severance: s. 409(2)
 Company Duty to register: s.410
 Removal of Criminal Sanction – except for property acquired
Inclusive Definition
a mortgage or a charge, in
an agreement (written or
oral), that is created over
an interest in any
property, assets or
undertaking of the
company
Exemptions
 Cash
 Money credited to an account of a financial institution, or any
other deposits, shares, bonds or debt instruments;
 UCITs or money market instruments
 Claims and rights in respect of any of these.
New Registration Procedures
Lodge
Particulars
Lodge Notice
of Creation
Lodge
Particulars
Backdated
Changes to the Register
 Removal of Amount
 Date of Creation
 Date and Time: Stages 1 and 2
Changed Priority Rule
First Received
Subject to
21 days
Other Enactments
Priority Agreements
Notice and Future Advances
 Seanad Amendment to ensure consistency
 Where charge covers future advances, effective for priority
except where notice served by second chargee
 s. 75 Registration of Title Act 1964
 s. 111 LCLRA 2009
Time Limits
Judgment Mortgages
 Registration within 21 days of judgment creditor’s receipt of
notification from PRA
 Can be effected by Judgment Creditor
 Priority – Land and Conveyencing Law Reform Act 2009
Extraneous Material
(a) the Registrar shall not enter in the register
particulars of extraneous material pursuant to
that section;
(b) the fact that the Registrar has received the
particulars of the extraneous material shall have
no legal effect
Extraneous Material:
Any Particulars of a Negative Pledge
Any Events that Crystallise a Floating Charge
Any Restrictions on the Use of Any Charged Asset
Certificate as Conclusive Evidence
415 (3) To the extent that the
particulars of a charge delivered to the
Registrar … omit the required
particulars in respect of one or more
properties to which the charge relates,
the evidential effect of the certificate
… shall not extend to the particular
property or properties in respect of
which that omission occurs.
Satisfaction
If signed knowing to be false: Criminal
Liability: s. 416(5)
If signed and did not honestly
believe on reasonable grounds
that the statement was true, and court
considers that the making of the
statement contributed to the company
being unable to pay its debts; prevented
or impeded the orderly winding up of
the company; or facilitated the
defrauding of creditors : potentially
liable without limitation: s. 416(6)
Transition
ss. 419/ 420
Created Before and 21 days not expire
Old Rules continue