Register of Charges: Miss 30 Days and the Security Is Void

Of all the deadlines in the Companies Act 2016, s.352 is the one with the sharpest consequence, and it is the one company secretarial blogs skip most often — usually on the reasoning that charges are the bank’s problem, or the lawyer’s.

They are not. Section 352(1) puts the lodgement duty on the company. And s.352(2) does something no other filing deadline in the Act does: it destroys the security. Not a fine. Not a compound. The charge becomes void against the liquidator and every creditor, and under s.352(3) the money secured becomes immediately payable. The lender is left as an unsecured creditor in a queue, and the reason is a form nobody lodged.

What has to be registered, and when?

Section 352(1) requires a company that creates a charge over its property or undertaking to lodge, within thirty days from the creation of the charge, a statement of particulars of the charge with the Registrar in the form and manner determined by the Registrar, together with the prescribed fee.

Section 353 lists the charges caught:

Registrable charge	Paragraph
A charge to secure any issue of debentures	s.353(a)
A charge on uncalled share capital	s.353(b)
A charge on shares of a subsidiary owned by the company	s.353(c)
A charge or assignment that would need Bills of Sale Act 1950 registration if made by an individual	s.353(d)
A charge on land wherever situated, or any interest in land	s.353(e)
A charge on book debts	s.353(f)
A floating charge on the undertaking or property	s.353(g)
A charge on calls made but not paid	s.353(h)
A charge on a ship or aircraft, or any share in one	s.353(i)
A charge on goodwill, a patent or patent licence, a trade mark, or a copyright or copyright licence	s.353(j)
A charge on the credit balance in any deposit account	s.353(k)

Two of these routinely surprise SME directors. A charge on book debts under s.353(f) captures invoice financing and receivables assignment. A charge on the credit balance of a deposit account under s.353(k) captures the fixed deposit pledged as collateral for a facility — a very common Malaysian arrangement that gets papered by the bank and never filed by the company.

Related deadlines sit alongside the main one. Section 355(1) allows a single lodgement within 30 days for a series of debentures. Section 356(1) gives 30 days from completion where the company acquires property already subject to a registrable charge, or where a foreign company registers in Malaysia with existing charges. Section 363 extends any of these periods by seven days, or longer at the Registrar’s discretion, where the instrument was executed or made outside Malaysia.

What exactly happens if the 30 days are missed?

Section 352(2): the charge is void against the liquidator and any creditor of the company, so far as any security on the company’s property or undertaking is conferred.

Section 352(3) preserves the underlying obligation — nothing prejudices the contract or obligation to repay — but the money secured immediately becomes payable. So the borrower loses the benefit of the term and the lender loses the benefit of the security, simultaneously.

There is one carve-out and one remedy.

The carve-out is s.352(5): failure to register a charge over property other than land does not affect the validity or limit the effect of the charge as between the parties. Read that carefully — it does not undo s.352(2) as against the liquidator and creditors. It preserves the charge inter partes.

The remedy is s.361. The Court may extend the time for registration or rectify the register if satisfied that the omission was accidental, due to inadvertence or some other sufficient cause, or is not of a nature to prejudice creditors or shareholders, or that it is otherwise just and equitable to grant relief. Relief is discretionary, conditional, and considerably more expensive than filing on time.

Separately, s.352(10) makes contravention of s.352(1) and s.354 an offence by the company and every officer, punishable by a fine not exceeding RM50,000 plus RM500 a day for a continuing offence.

Section 352(8) is the practical safety net: any person interested in the charge may lodge the particulars before the registration period ends, and under s.352(9) recover the fees from the company. A lender who does not trust the borrower’s secretary to file can file itself.

Where does the internal register duty sit?

Section 362, and it is a completely separate obligation from s.352.

Section 352 is the notification duty. Lodge particulars with SSM within 30 days. The consequence of failure is the loss of priority and the voidness in s.352(2).

Section 362 is the register duty. Section 362(1) requires the company to keep the instrument creating any registrable charge, or a copy of it, at the registered office. Section 362(3) requires the company to keep at the registered office a register of charges and enter in it all charges specifically affecting the company’s property and all floating charges, giving in each case a short description of the property charged, the amount of the charge, and the names of the persons entitled to it, except for securities to bearer.

The two do not substitute for each other. A company that lodges every charge with SSM and keeps no internal register is in breach of s.362 — and s.362(6) carries a fine not exceeding RM50,000 plus RM500 a day, the same headline exposure as s.352. A company that maintains a flawless internal register and files nothing has valid paperwork and worthless security.

Section 362 also carries its own access rules. Under s.362(4), any creditor or member may inspect the instruments and the register for RM5; any other person pays a fee fixed by the company not exceeding RM10 per inspection. Under s.362(5), any person may apply for a copy of an instrument of charge or debenture and must be furnished with it within three days of the application, at a fee not exceeding RM10 per page.

What happens over the life of the charge?

Three further filings, all on their own clocks.

Assignment — 30 days. Under s.359(1), where a person other than the original charge holder becomes the new holder, the new holder must within 30 days lodge a notice with the Registrar and give a copy of the notice to the company. The duty sits on the assignee, not the company.

Variation — 30 days. Under s.359(2), where the terms are varied so as to change the amount of the debt or liabilities secured, or to prohibit or restrict the creation of subsequent charges on the property, the company must lodge notice of the variation within 30 days of the variation occurring.

Satisfaction or release — 14 days. Under s.360(1), where the debt has been paid or satisfied in whole or in part, or the property has been released from the charge or ceased to form part of the company’s property, the company must lodge the particulars within fourteen days, supported by sufficient evidence under s.360(2). Any other person entitled to the charge may lodge it instead under s.360(3).

That 14-day discharge clock catches people out precisely because it is shorter than the 30 days allowed to register in the first place. Companies that settle a facility and move on leave a charge showing as live on their SSM record — which then surfaces in the next round of bank due diligence.

What does SSM’s registration prove?

Section 357(1) requires the Registrar to keep a register of all charges lodged, and s.357(2) sets out the particulars entered. Section 357(3) is the payoff: the certificate of registration issued by the Registrar is conclusive evidence that the requirements as to registration have been complied with.

That is a stronger evidential statement than the prima facie standard applied to the register of members under s.50(3), and it is why lenders insist on sight of the certificate rather than a lodgement acknowledgement.

Common mistakes

• Assuming the bank or its solicitors will file. Section 352(1) puts the duty on the company. Section 352(8) merely permits an interested person to file as well.
• Running the 30 days from drawdown or from stamping. The clock runs from creation of the charge.
• Missing the fixed deposit pledge. A charge on a credit balance in a deposit account is registrable under s.353(k).
• Missing invoice financing. A charge on book debts is registrable under s.353(f).
• Reading s.352(5) as a general excuse. It preserves a non-land charge between the parties; it does not save the charge against a liquidator.
• Filing with SSM and keeping no s.362 register. Two duties, two RM50,000 exposures, one at the registered office.
• Forgetting the discharge. Section 360(1) allows only 14 days, and a stale charge on the SSM record follows the company into every future financing.
• Overlooking acquired property. Section 356(1) applies when the company buys an asset that already carries a registrable charge.

What’s next

Pull the company’s SSM charge listing and put it beside the s.362 register and the loan file. Three questions resolve most of the risk: is every live facility registered, is every settled facility discharged, and is a copy of every charge instrument physically at the registered office as s.362(1) requires. If a charge was created more than 30 days ago and never lodged, that is a s.361 application to the Court, not a late filing — take advice before lodging anything.