Beware of Companies House disclaimers

Last year the Journal published a number of letters alerting the profession to a disclaimer attached to the Companies House Direct System (CHD). A further disclaimer has recently appeared on the CHD website in relation to information supplied by Companies House. I can do no better than to narrate these here in full:

“Disclaimer

“The information available on this site is not intended to be comprehensive, and many details which may be relevant to particular circumstances have been omitted. Accordingly it should not be regarded as being a complete source of company law and information, and readers are advised to seek independent professional advice before acting on anything contained herein. Companies House cannot take any responsibility for the consequences of errors or omissions.”

“Company Information Supplied by Companies House

“Companies House is a registry of company information. We carry out basic checks to make sure that documents have been fully completed and signed, but we do not have the statutory power or capability to verify the accuracy of the information that companies send to us. We accept all information that companies deliver to us in good faith and place it on the public record. The fact that the information has been placed on the public record should not be taken to indicate that Companies House has verified or validated it in any way.”

The charges register (mortgage index) in respect of companies registered in England and Wales is of particular concern. Whilst the legislation does not stipulate any timescale within which the registrar is obliged to place on the register documents that have been delivered to him/her, there appear to be increasing delays, first between receipt and registration (commonly five working days), and secondly between registration and the date when the document is flagged up on the CHD system. Unlike Scotland, where there is a day book of received documents (akin to the presentment book in the Sasine Register or the application register in the Land Register), there is no method in England and Wales for identifying documents presented for registration which do not appear on the register.

The problem is compounded by the practice of in effect backdating the registration to the date of receipt. While the document is in this limbo state, a visit to CHD will not detect its existence.

A further problem relates to “time credit”, given to charges presented for registration containing clerical or typing errors and those with more fundamental errors. While these errors are being assessed, or in the case of simple errors the document is returned to the submitting agent for correction, the registration is again in limbo but retains its original date of registration.

One final problem encountered relates to entries placed on CHD and subsequently removed without explanation or noting. An entry can appear on CHD one day and simply disappear the next day or sometime later with no audit trail.

I have written to the Chief Executive/Registrar of Companies highlighting the various problems associated with the CHD mortgage index and the registration of charges but her reply gave me little comfort.

Linsey Lewin, the secretary to the Conveyancing Committee has kindly agreed to raise these matters with the Registrar in Cardiff on behalf of the profession.

Since Companies House ceased updating company microfiche on 31 December 2002 (albeit microfiche records are still available for inspection to that date), the current situation is unsatisfactory and puts the conveyancer at risk. To mitigate that risk it is imperative that when searching the register of charges all the relevant original documents filed at Companies House are searched and cross checked to ensure that the report is accurate. It is my understanding that a number of private search companies implement this practice and their reports are backed by professional indemnity insurance.

Where possible, appropriately worded directors’ warranties should also be obtained.

Russell Paterson, Miller & Bryce Ltd