Companies Act, Cap. 308 and the Companies Regulations, 1984
An Act to revise and amend the laws relating to companies and to provide for related and consequential matters. View the Act. View the Regulations
As is the case with natural persons, a company may create a legal or equitable obligation to pay money or may create an obligation to repay a loan secured upon its land or other assets.
The creation by a company of such an obligation or security interest is referred to as a company charge. Charges may be fixed (i.e. attaching to specific assets of the company) or floating (i.e. generally covering all unspecified assets present or future of the company.)
Part II Division A of the Companies Act, Cap. 308 sets out the specific rules governing the registration of charges created by companies incorporated or continued under the Act. Charges created or acquired by “external companies” on property in Barbados are also subject to the provisions of Part II Division A of the Companies Act and with like consequences as if the “external company” were a company which is incorporated or continued under the Act. Section 252(2) defines “external company” as a firm or other body of persons, whether incorporated or unincorporated, that is formed under the laws of a country other than Barbados.
Persons interested in the charge documents (e.g. a bank, mortgage company or other creditor) may require the documents to be lodged or themselves lodge the documents with the Registrar for registration.
Section 237(1) of the Companies Act, Cap. 308 provides that if documentation relating to or evidencing the creation of a charge is not lodged with the Registrar of Companies within 28 days after the creation of the charge, the charge is void so far as any security interest it purported to create.
The requirement is founded in a desire to protect creditors and to provide a mechanism for providing notice to the world of the state of affairs in respect of the security given by a charge on assets of the company.
Section 237(1) of the Companies Act, Cap. 308 provides for the following documents relating to or evidencing the creation of a charge to be lodged with the Registrar for registration:
1. Statement of Charge containing the particulars prescribed in section 238 (See below);
- the date of the creation of the charge;
- the nature of the charge;
- the amount secured by the charge, or the maximum sum deemed to be secured by the charge in accordance with section 242;
- short particulars of the property charged;
- the persons entitled to the charge; and
- in the case of a floating charge, the nature of any restriction on the power of the company to grant further charges ranking in priority to, or equally with, the charge thereby created.
2. The original instrument creating the charge or alternatively,
3. A copy of the instrument creating the charge;
Where a copy of the instrument creating the charge is filed instead of the original instrument, a statutory declaration verifying the execution of the charge and verifying the copy as a true copy of the original instrument should accompany the copy;
- the date of creation of the charge;
- the nature of the charge;
- the amount secured by the charge, or the maximum deemed to be secured (being the maximum covered by the stamp duty paid thereon);
- short particulars of the property charged;
- the person(s) entitled to the charge;
- where the charge is a floating charge, the nature of any restriction on the company’s power to create further charges ranking in priority to, or equally with, the charge.
Since the Registrar of Companies also functions as adjudicator of stamp duty under the Stamp Duty Act, Cap. 91, no charge documents will be processed unless Government stamp duty is paid thereon.
Accordingly, all documentation evidencing the charge must be adjudicated and appropriately stamped with the required stamp duty by the time they are presented for registration at the Corporate Registry.
On receipt of the above documents together with the appropriate filing fee, an officer in the Registry conducts a “formality examination” of the filed documents to ensure that the documents are appropriately stamped and were filed within the statutory period and that all necessary documents have been filed in accordance with the Companies Act.
The particulars of the company charge are manually entered at the appropriate page and folio of the Register of Mortgages and Charges (viz. a series of volumes of large bound Register Books) The charge is also appropriately indexed in a separate Index for subsequent search purposes. The relevant page and folio numbers corresponding to the entry in the Register are also manually inserted in the Certificate of Registration. All documents are then passed to the Registrar of Companies who conducts a “substantive examination” of all the charge documents to ensure that they meet the statutory and legal requirements.
The Certificate of Registration and the duplicate thereof is then signed by the Registrar upon being satisfied that legal requirements have been met. After issuance by the Registrar of the Certificate of Registration, one set of duplicate documents is returned to the person filing the documentation together with the signed Certificate of Registration, while the remaining signed certificate together with the other set of filed documents is placed on the relevant companies file where they are available to any member of the public desirous of ascertaining the state of affairs in respect of the security given by the charge on assets of the company.
Where documentation filed contains errors or other matters which in the opinion of the Registrar require corrections to be made, a note of the defects requiring correction is made and kept on a pending file where same can be checked by the company secretary, legal clerk, bank official or other person who filed the documents for registration.
- Documents not properly dated, signed or witnessed;
- Company seal not affixed;
- Company resolution not dated;
- Obvious discrepancies between the way in which the charge is referred to on the actual instrument creating the charge and the way in which the charge is referred to in the Statement of Charge, or in the Statutory Declaration accompanying the Charge, or in the draft Certificate of Registration prepared for the Registrar’s signature;
- The Statement of Charge not properly or accurately completed, (e.g. all statutory particulars not filled-in);
- Discrepancies between how the property secured by the charge is described in the Statement of Charge and the property actually secured in the instrument creating the charge;
- Discrepancies between the amount secured by the charge as shown in the Statement of Charge and the amount mentioned in the instrument creating the charge or in the draft Certificate of Registration submitted for the Registrar’s signature;
- Where the instrument creating the charge is expressed to secure an unlimited amount or covers a fluctuating amount, the maximum sum covered by the stamp duty paid thereon is not stated in the Statement of Charge or on the Certificate of Registration submitted for the Registrar’s signature. The foregoing matters are all legal requirements which must be complied with and corrected before registration can be finalized and a Registration Certificate issued.