Companies (Particulars of Company Charges) Regulations 2008

BERR have published The Companies (Particulars of Company Charges) Revised Draft Regulations 2008.  They, Err …, deal with the information to be provided to the Registrar of Companies on the registration of company charges under Part 25 of the Companies Act 2006.  These are timetabled to come into force on 1 October 2009. 

They are still in draft and capable of revision but I think this is unlikely.  The prescribed particulars for English and Welsh companies are—
“(a) the date of the creation of the charge;
(b) a description of the instrument (if any) creating or evidencing the charge;
(c) the amount secured by the charge;
(d) the name and address of the person entitled to the charge; and
(e) short particulars of the property charged.”

For Scotland, the prescribed particulars are:

“(a) the particulars prescribed by regulation 2; and
(b) in the case of a floating charge, a statement as to any provisions of the charge and of any instrument relating to it which prohibit or restrict or regulate the power of the company to grant further securities ranking in priority to, or pari passu with, the floating charge, or which vary or otherwise regulate the order of ranking of the floating charge in relation to subsisting securities.”

 

 

“Rome I - Should the UK Opt in?”

The Ministry of Justice has issued a consultation paper addressing the issue of whether the UK should opt in to the Rome I Regulation on choice of law in contract.   BLB has been concerned about Rome 1 before.

The Rome I proposal will provide clarity over which law applies if a dispute arises over a contract made between people or businesses from different countries.  The idea is to allow cross border trade to continue with confidence.  Questions arise for the banking industry in relation to securitisation and assignments, among other things.  There will be - or should be - a great deal of debate on this from bankers.  For a couple of years now there has met at MinJ, and before that at the DTi, a stakeholder group of lawyers and eminent academics who have ironed out the worst problems of the drafting.  There are still enough practical problems that need to be addressed that, eg, ISDA has formed a working group to work out what to do about the proposals.

The Government thinks the UK should opt in to the Rome I Regulation.  In doing so, they think the UK should apply similar rules to contracts connected to two or more jurisdictions within the UK. 

The Government wants to test this conclusion by seeking the views of stakeholders.  The consultation paper seeks views on:

• Is it in the national interest for the Government to seek to opt in to the Regulation?
• Should the Rome I rules apply throughout the UK if the UK opts in to the Regulation?

Responses must be submitted to the HM Courts Service by 25 June 2008.

Electronic fraud - new law?

The House of Lords has recommended the Government introduce legislation to make banks liable for losses incurred as a result of electronic fraud and suggests that the Government consult on a “data security breach notification” law. 

In their Science & Technology Report  they discuss financial fraud such as phishing and personal identity theft.  The report notes that “figures on the scale of the problem are hard to come by. Indeed, the lack of data on identity theft is symptomatic of a lack of agreed definitions or detailed statistics on almost all aspects of Internet security”. 

Chapter 5 considers in detail the lack of security measures in the the banking industry.  It suggests that the lack of a single regulatory regime adds to the problems.

Dormant bank accounts

There has been so much in the press on this topic, it hardly needs Banklawblogger to chip in, but the Daily (”Give us back our money, you … you … banks!”) Tabloid doesn’t provide you with the link to the Treasury Select Committee Report.  Here it is.  Don’t try to print it out unless you need 180 pages to slam on someone’s desk for effect. 

The report argues against the Government’s proposals for a voluntary approach to the scheme.  It looks at whether consumer interests will be safeguarded and if the Banking Code is the appropriate “regulatory” vehicle.  The report suggests that 15 years of no activity on the account is too long to move the account to dormant status but welcomes the fact that all forms of customer activity will be recognised.  The activity doesn’t have to just come from the customer.  Such non-transaction activity should be defined and evidence must be retained by the financial institutions to prove an account’s dormancy. 

There has been discussion about the scope of the scheme and the report recommends that National Savings & Investments be included and suggests that the Government investigates proposals for the scheme to include other classes of unclaimed asset, including insurance.  suggests a single search facility for reclaims (at present, BBA, BSA and NS&I run separate facilities, though the BBA are working closely with them according to this press release.)

Banklawblogger posted earlier this year on this.  On 11 June, Gordon Brown included the Unclaimed Assets Bill as one of the proposed bills to be introduced in the next parliamentary session.

Royal Assent for Corporate Manslaughter and Corporate Homicide Bill

Royal Assent was granted to the Corporate Manslaughter and Corporate Homicide Bill on 26 July 2007.  Organisations will need to review their procedures and systems to ensure they do not fall foul of the new offence created by the Act once it comes into force.  

An organisation will be guilty of an offence if the way in which its activities are managed or organised causes a person’s death, and amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.

After what must be one of the longest ever ping-pong matches between the Lords and the Commons (”Patricians” v “Plebs”), the Lords got both their way and an amendment to include deaths in custody.   (Why the Commons held onto their position for so long that the Bill should be later amended by Statutory Instrument to include deaths in custody is a mystery.)

The Bill was first introduced in last year’s Parliamentary Session and having run out of time, had to be re-introduced at the start of this session.  There is a rule that Bills must either receive Royal Assent or be dropped within 12 months of their original introduction; unusually, a one-week extension was granted to this Bill.

New Acts - Tribunals, Courts and Enforcement Bill gets Royal Assent

Parliament has been busy while Banklawblogger has been on sunny holiday.  Nine bills were granted Royal Assent on 19 July, the most interesting being:

• Consumers, Estate Agents and Redress Bill
• Tribunals, Courts and Enforcement Bill
• Mental Health Bill
• Finance Bill
• Rating (Empty Properties) Bill (see this)

The others being:

• Parliament (Joint Departments) Bill
• Vehicle Registration Marks Bill
• Concessionary Bus Travel Bill
• Consolidated Fund (Appropriation) (No.2) Bill

Administration expense - empty rates?

Trident cast a chill by suggesting that business rates incurred on empty properties should be an administration expense.  Given that the Department of Communities of Local Government (DCLG - is Banklawblogger alone in having trouble remembering the names and acronyms of all these shiny new Departments?) is to review the business rates structure including the potential abolition of empty rate exemption, except for liquidation, this may become a real problem for administrators - and floating charge holders. 

The Rating (Empty Properties) Bill  can be seen here.  If the government manage to push this through, the changes to the business-rate relief for empty properties would come into effect in April 2008.

Corruption Bill

The Corruption Bill has lain quiet on the books of the House of Lords since it was re-introduced in November 2006, but there have been signs of activity in the past few weeks.  It received its first reading in the Commons on 15 June 2007.  It may still remain dormant and not make it through to the end of the session on 27 July but it may get passed.  It’s a short Bill, surprisingly short at 24 sections - though Banklawblogger knows little about corruption.  It will repeal the early 20th century Prevention of Corruption Acts, and updates the offence of corruption. Under the Bill, “a person will commit an offence if he gives an advantage to or procures an advantage for any person or offers or agrees to give an advantage to or to procure an advantage for any person with the intention of influencing that person, or another person, to exercise a function improperly or as a reward for so exercising a function”.  It extends the offence to agents and does not go into any practical details on enforcement for offences committed outside the jurisdiction.

Tax: direct attachment of accounts

Her Majesty’s Revenue and Custom have plans to lobby for a change in the law to give them the power (without the strain of getting a court order) to freeze an amount in a defaulting taxpayer’s bank account equal to the debt owed by the taxpayer.  Here is the 40-page consultation document.  The idea, at 5.12 on page 21,  is that this sum would be paid over to the Revenue by the Bank on demand if other attempts to collect the debt failed.   As well as being able to freeze sums in bank accounts, the Revenue propose to have the power to place a charge on land and buildings enabling them to be paid if the asset were sold.  Given at the very least the potential for error in HMRC’s calculation of the tax bill, the suggestion is fraught with difficulty for both bank and customer.

Lasting Powers of Attorney - less certainty?

When Lasting Powers of Attorney (LPAs) come into effect on 1 October 2007, banks will need to check they are registered before acting on them.  And they will be deprived of the clearest, simplest proof they had of the continuing mental incapacity of their customer.  I mean that under the current regime of Enduring Powers of Attorney (EPA), which will end on 30 September this year, it is a requirement for the attorney to register the power of attorney when the donor has lost mental capacity at the Court of Protection (now the Public Guardianship Office and from 1 October, The Office of the Public Guardian).  Registration was clear proof to a bank, without further enquiry, that their customer had regrettably lost mental capacity. 

This matters at law because it is not possible to contract (or to give instructions for the operation of a bank account) if you do not have mental capacity.  If a bank acts on the instructions of a customer who lacks mental capacity, the bank potentially renders itself liable, depending on the facts of the matter, for paying away money, for example, from the customer’s account without having authority to do so.

The new Lasting Powers of Attorney are to be registered as soon as they are created.  The donor does not need to have lost mental capacity and the bank cannot act on the Power until it is registered.  From then on, in theory (but surely this is impractical) the bank will have to continue to assess the capacity of the customer on every transaction.  The Mental Capacity Act 2005, which introduces the LPAs says that a person lacks capacity … if he is unable to make a decision for himself … because of an impairment or disturbance in the functioning of the brain (ss 2, 3). Banks have to make these sort of assessments of their customer’s capacity on a daily basis unless the customer is invisible, tapping away on-line or speaking to their call centre or withdrawing from an ATM - actually, how many times does a bank get to see its customer nowadays?  So there is nothing new in that, but they will have to get used to the new LPA and its registration requirement and the absence of the registered EPA which was the final proof that the customer could not longer manage its affairs.

Existing EPAs will continue to have effect, but no new ones can be created after 1 October.  There will be two sorts of LPA: a “property and financial affairs LPA” which is the type a bank is likely to see, and a “personal welfare LPA”.  The forms are separate and lengthy.  Banks will need clear procedures and good training in place to advise staff what to do when they suspect that a customer lacks capacity to make a decision about his property and affairs.