Company Law: Report on Drafting Exercise and Memorandum of Advice

This report presents a detailed analysis of company law, focusing on a drafting exercise and a memorandum of advice. The drafting exercise addresses the process of registering a charge under the Companies Act 2006, including the required form MR01, associated fees, deadlines, and consequences of late registration. It also explores exceptions for late registration and the implications of failing to register a charge. The memorandum of advice provides recommendations to the directors of Jolly Holidays Ltd regarding insolvency, comparing Company Voluntary Arrangement (CVA) and administration. It highlights the benefits of administration, such as automatic protection from legal proceedings and the absence of creditor approval, and details the procedures and objectives of both CVA and administration, including court involvement. The report emphasizes the advantages of administration for the company's financial restructuring and provides a comparative analysis in an appendix.

Company Law

Table of Contents
PATCH 2: Drafting Exercise ..........................................................................................................3
PATCH 3: MEMORANDUM OF ADVICE .................................................................................7
REFERENCES..............................................................................................................................14

PATCH 2: Drafting Exercise
TO: S. JONES, PRINCIPAL
FROM: A. TRAINEE
DEPT: CORPORATE
DATE:
Client File Reference: JH15/01-19
Presenting responses required for questions
a) To validly register a charge, there are other steps and documentation that must
accompany the form you have identified and filled in. What are these?
COMPANIES ACT 2006:
As per the provision of companies act 2006, The charges created against the asset of a
company as a secure credited are requisite to get enrolled in the companies house (Macpherson,
2019). Since 2013 the registrar on charge has been made voluntary but the requirement by the
secure creditors for registration is necessary as a failure by the company in repayment will not
render the charge void. As per section 859(A) of the companies act 2006 form MR01 is required
to be filled electronically to the companies house. It can be filled in by either the company Jolly
Holiday Ltd or the bank Natwest Plc from which loan is taken. To create a charge over the land
in the cosgrove against the secure creditor Natwest the registration procedure is as follows:
 To complete the form MR01 with all the disclosure such as date of creation of charge
here it is 2nd Jan 2019, defining the name of person or institutes who have created charge
here bank Natwest, a description of the charge and nature of he charge.

 Attaching a certified copy of the deed or the papers which are written down to make the
charge more evidential the documents are required to possess sign by the bank who is the
lender.
 Paying out the registration fees for registration of the charges.
b) How much will Jolly Holidays Ltd be charged for filing the documents required?
Form 395
The registration application for the entitlement of the charge over the land and as well as
tractor it is requited to give a fees of £23 to the companies house physically through papers
(Haldrup, 2017). To file an application to the company house digitally the Jolly Holiday Ltd
will need to pay a fees of £15 for getting the charge registered.
c) Apart from Companies House, would it be necessary to keep a record of the charge
elsewhere?
Section 895 of Companions act 2006
The information of the charge created is held by companies house with all the details
over the creation of charge. The information is not required to be kept any where else apart from
the companies house along with the lender awe well as the company who has taken loan. The
information related with the creation of charge is kept with the Jolly Holiday Ltd and Natwest
Plc. The information send to the companies houses is appears on the public records and this
includes all the information on the documented transcript of the paper.
d) When is the latest date for the documents to be filed with Companies House?
Section 895 of Companions act 2006
For the present case the Jolly Holiday Ltd or Natweat Plc charge is created on 2nd
January 2019 so 21 days start from 3rd January 2019 and last till 23rd January 2019 (Spiro, 2015).
here it can be stated that application for registration of charge over the the land in cosgrve as well
as the Deere tractor (9560 model) must be filed with in 3rd -23rd January 2019.
e) What will be the consequence of failing to register by the latest date you have
identified?

Section 895 of Companions act 2006
A company when failure to registrar a charge is not considered to commit a criminal
offence. However, the serious consequence can still result form non registration of the charges
created against the assets or property of the company. When a charges is not registered and a
failure in registration of the charge will lead to the effect of rendering the charge void and the
security against the loan will held no validity. (Registering a charge (mortgage) for a company,
2019). in case there is a doubt related with the creation and registration of charge is its always
advisable to file the form MR01 and get the charge registered as there in no drawback in doing
so.
Before changes in the Companies Act was made simile, a failure in registering a charge
it was rendered to be a criminal offence on the part of the company as well as those officer who
were responsible for getting such charge registered. With commencement of Companies act
2006, there is no compulsory requisition to get registered a charge along with removal of
imposition of criminal liability. But the fact can not be denied that non registration of the charge
within 21 days through filing MR01 makes the charges created unsecure.
f) Are there any exceptions for late registration?s
There is an exclusion available to a freshly entitled charge which are not certified under
the stipulated time frame of 21 days. This exception is that an application to the companies court
can be made to extent the period of the registration. The application fro registration of charge
can either be made by company Jolly Holiday Ltd or the lender Bank, Natwest Plc. For getting
an extension there is a lengthy procedure to be followed which requires to file a Claim from of
CPR Part 8, then complete a Claim for an Order Extending Time for Registering a Charge. With
this a charge deed pt the witness statement in support is required to be attached. With this the
application fees of court must be paid out pay the time of lodging the application (Registration
Of UK Company Charges – Theory And Practice, 2019). An evidence of solvency must be
provided. The director or the company secretary of the company on whom charge is applicable
and this statement must be signed by the relevant authority. With this certain requirement must
be confirmed as order has been made against the company, pending winging up petition,
resolution notice of wind up the company and company operates as going concern.

PATCH 3: MEMORANDUM OF ADVICE
TO: S. JONES, PRINCIPAL
FROM: A. TRAINEE
DEPT: CORPORATE
DATE: [include here]
Client File Reference: JH30/03-19
ADVICE:
The directors of the company John, Peter and Harold are given an advise to go
under administration. This suggestion is given to them as administration procedure have
two major benefits over the CVA process. One of them is that, no approval form the
creditors is required. Second and most importance one is that company gets a automatic
protection form the the legal proceedings . This means that the company when goes under
administration all its operations are taken over by the administration and the directors will
not have a control over the business operations. Moreover, the company gets a immunity
against the legal proceedings where creditorsare not liable to bring in any legal proceeding
on the company. The creditors automatically losses their rights to file a compulsory winding
up petition in the courts and also they can not make a claim on the assets of the company as
well.
As per deicded case of Re SHB Realisations Ltd v v Prudential Assurance
Company Ltd, 2018 it cab be stated that the compromises and releases effected under the
CVA shall be deemed never to have happened, such that all landlords and other
compromised CVA creditors shall have the claims against [the Company] that they would
have had if the CVA Proposal had never been approved (less any payments made during the
course of the CVA( Re SHB Realisations Ltd v v Prudential Assurance Company Ltd,
2018 , 2019).
The advise is given to the company Jolly Holidays Ltd on the basis that comparisiojn
carried out bwttween CVA and administration. To stop legla proceedings under administration
no permission of court is required rather under CVA comany need to take permission from
courts to stop legal proceedings. It is empowered to comany unsecre the provision of
administration. With this it can be stated that the company must go under administration where
the secured creditors will be paid first form the amount of assest realisation and after that

unsecured creditors will be paid off. The option of administration is more practicable as under
this the assets will be sold of without stopping the trading and business of the company.
This is advisable to the Jolly Holiday Ltd that it must go under administration and
file a application in the court to go under administration and appointment so a insolvency
practitioners as administrator to take over the business operation in his/her hand and get
back the company to profitable position as before.

APPENDIX 1
CVA Administration
Commensement of
process
As per the insolvany act 1986,
The complusory voluntarty
agreement is a potion which can
ve exercsied by a limited
company and is insovent to pay
of the creditors in a specfiic time
period With the approval form
the creditors the company can
still continue to trade and
activities of business and trade.
Administration can be defgnied
as a procedure of bankruptcy
where a buasniess is taken over
by a administrator to revive the
comany and continuation the
trading of the company. The
procedure starts with company
going into administration through
taking a order from court.
Appointment of an
insolvency
practitioner:
The procedure for applying for
CVA stats with unanimous
consent from all the directors of
the company. All the directors
must give approval for going
under CVA with the creditors.
The CVA can be get only
through insolvency practitioner.
After getting a
unanimous approval from all
three directors of company
John, Peter and Harold the
appointment of the insolvency
practitioner is done (Noh, , So
and Weber, 2017). The
insolvency practitioner is
imposed with the duties and
responsibilities to work out the
The procedure of administration
commenced by administrator who
is a insolvable practitioners who
act as an agent of the company
and an officer of the court
(Walton, Umfreville and Jacobs,
2018).

arrangement which cover all the
debt amount and set out the
payment schedule. For carrying
out this activity the practitioners
is given a time period of 1
month form the date of his/her
appointment fro carrying out the
given task.
Objectives: The main motive of CVA is to
pay of the debts of the creditors
over a ex tented time without
dissolving the company. The
creditors and company enter into
an agreement where repayment
of the dues are done over long
time where company may
continue to trade with approval
of creditors.
Under this company gets a
automatic moratorium where no
creditor can bring a legal
proceeding against the company
or its asset to pay of the dues to
creditors.
Court
involvement:
There is no involvement of court
in the CVA process as the
insolvency practitioner is
appointed the directors of
company and that person is
wholly liable it carry out the
procedure of CVA.
For administration the
involvement of courts can be seen
as as court is the only authority
which can bring in a action of
administration for a insolvent
company. The courts gives an
order of administration over the
application made by certain
parties to which company owes
some dues or over an application
made by the directors of the
company.

Elements of the
proceedings:
For conducting the process of
CVA the letters and information
to such arranging is sent to the
creditors to take their vote on the
matters. This means after taking
the consent from all the directors
the insolvency practitioner s
required to take permission from
creditors to enter into such
arrangement with the company.
For success of CVA at 75% (by
value of debt) of the creditor
must give vote in favour of the
arrangement.
There is a requirement to get
consent from ¾ of the creditors
of the company to get into CVA.
The administration process
comes with filing an application
for the company to be
administrated. The courts gives
an order for the same. With this
the condition is imposed where
no legal action can be brought
against the company till the
continuation of administration
process.
Moratorium? With the CVA the company
can file an application in the
court to stop the crrditors from
taking any legal action aganist
the company. The legal actions
can be filing a winding up
petition or claiming the charges
aganist the assest of the
company.
With getting into administration
the company gets a automatic
moratorium where creditors can
not bring in a legal action against
the assets of the organisation.
Under the administration a
default conditions comes which
states that with incorporation of
the administration proceeding no

creditor can bring in legal action
against the company for its
compulsory winding up or for
making claim on the assets of the
company to recover their dues
form the company. The other
elements of administration
includes taking the property of
the company into possession and
then sale them as well to realise
proceeds to pay of the dues to
creditors.
Debtor in
possession?
With getting the assent over the
CVA no creditors have no right
to bring legal proceedings till
the continuation and adherence
to CVA terms. (Cohen and Ruiz,
2016). Also, if any action of
winding up is brought against
the company the same stands to
be ceased after entering to
CVA.
The debtors in possessions are
required to pay of their debts to
the company the administrators
may demand the dues form the
debtors of the company and use
the amount realised to pay of the
creditors (Vargas, and Miñano,
2018). The position of the debtors
remained open as the business is
still running and it is a going
concern the debtors owes their
responsibility towards company
and they have a obligation to pay
of the dues to the company
Effects on secured
creditors:
The company is required to
maintain a on going relation
with the business as well the
The secured creditors are entitled
for the repayment form the
realisation of the amount by

credirtors of the business with
whom trading is done and is
proposed to be continued for
making profits. The secured
creditors are also paid in the
proportion agreed under the
CVA.
selling assets of he business . The
secure creditors have a right to
make a claim as an unsecured
creditors for any balance. The
unsecured creditors are paid in
accordance to the pari passu
principle.
End of the
procedure:
The end of agreement comes
when the agreed term of the
payment have been made and all
the conditions within the
proposal have been abided with.
With the end of CVA period, if
any debt is still outstanding it
may be written off or the CVA
can be extended (Company
Voluntary Arrangements, 2019).
The process of administration
comes to an end automatically
ends afters every calendar year
until the creditors or court agree
on the extension of the
administration period. In general
a company remain under
administration for ore than one
year as under this all the creditors
are paid of which continuing the
business operations of the
company as well.