PDF DOWNLOADASIC does not notify parties where the requirements have not been followed and usually the first indication that a charge has not been validly registered is a letter from an administrator, who, upon closer inspection, has noticed a deficiency in registration.
In such circumstances, the Corporations Act does allow a court to extend the time requirements in order to rectify deficiencies in registrations.
Recent case
The most recent reported incidence of a security holder seeking court assistance for a deficient charge is set out in the decision of Hadfield v ACN 092 328 4000 [2011] NSWSC 114. In this case, the plaintiff’s action was based on a claim that the charge document had been incorrectly dated rather than there being a failure to lodge the charge within the prescribed time limit. Based on the evidence, the security holder succeeded in demonstrating to the Court that the charge had in fact been incorrectly dated and the Court ordered this to be rectified. The rectification gave the charge a later creation date which caused the charge to have been lodged in time.
The case provides another reminder of the importance of complying with the procedural requirements for registering charges. Although the misdating was central in this case and not an oversight leading to late lodgement, a simple error or oversight can result in the benefit of a security being lost and the creditor being forced to stand alongside other unsecured creditors in any wind-up.
Recommendations relating to registrations of charges
We set out below some suggestions to ensure that charges are properly registered:
- Place a high priority on the charge registration process: Be aware the date the charge was created and the date the 45 day registration period will elapse.
- Check the details carefully: Ensure that the details on the charge documents (including the date) and on the ASIC forms are correct and the documents been signed in each place a signature is required.
- Register your charges as soon as they are created: In almost all circumstances the charge registered first ranks first. Our practice is to lodge a copy of the charge for registration with ASIC on the date of creation (provisionally, if necessary) and to stamp the original afterwards. This necessitates the lodging of an additional ASIC form following stamping but ensures that the charge has been lodged “in time” and also that priority is preserved. However, it is important to note that ASIC will remove the charge from the register if the subsequent ASIC form confirming that stamp duty has been paid has not been lodged with ASIC within 90 days of the date of provisional registration.
We also note that it is anticipated that from October 2011 there will be a new process for registering security interests under the Personal Property Securities Act 2009 which will replace the system of registration of charges under the Corporations Act. We wil provide further information about the new regime closer to its commencement.
Contact details
Sydney
Darren Pereira, Partner
T: +61 (0)2 8083 0487
E:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Melbourne
Dan Pearce, Partner
T: +61 (0)3 9321 9840
E:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Brisbane
Philip Vickery, Partner
T: +61 (0)7 3135 0632
E:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Disclaimer
The information in this publication is of a general nature and is not
intended to address the circumstances of any particular individual or
entity. Although we
endeavour to provide accurate and timely information, we do not
guarantee that the information in this newsletter is accurate at the
date it is received or that it will
continue to be accurate in the future.