The Draft Company Security Regulations 2006

A brief introduction to some of the fundamental changes proposed to be made to the system of registration of security interests created by companies and the consequent effect on priorities of competing interests. The changes, proposed to be introduced by way of secondary legislation, will also bring within the scope of registration some transactions which do not even contain a grant of security. The consequences for banking practice will be significant.

As part of the current lengthy process of corporate law reform the DTI has now produced, separately to the Company Law Reform Bill, the draft form of the proposed Company Security Regulations 2006 (the "2006 Regulations").

Most readers will be well aware of the various shortcomings of the present system of registration of company security interests as set out in Part XII of the Companies Act 1985. In particular, the following are generally considered to require some resolution: