Company Security Documents UK: Types & Uses
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When a company borrows money, the lender will almost always want something more than a promise to repay. That 'something more' usually takes the form of one or more security documents, which give the lender legal rights over company assets if things go wrong.
For directors and business owners, these documents can look dense and intimidating, yet the consequences of signing them are very real. This guide walks through the main types of security used in UK corporate lending, why each one matters, and the practical points to think about before putting pen to paper.
Whether you are raising finance for growth, refinancing existing debt, or reviewing a facility letter a bank has put in front of you, understanding how security works will help you make better decisions and ask sharper questions.
Overview
A company security document is a legal instrument that gives a lender, or another creditor, rights over a borrower's assets as backing for an obligation. If the borrower fails to pay or breaches the agreement, the secured party can enforce those rights to recover what it is owed, often by appointing a receiver, selling assets, or taking control of the business.
Security can sit over specific items, such as a particular piece of machinery, or over the whole of a company's undertaking. In the UK, most corporate security granted by a company must be registered at Companies House within strict time limits, or it risks being void against a liquidator, administrator, or other creditors.
Different documents serve different commercial purposes. A debenture is typically used by banks lending to trading companies, while a share charge might be used in an acquisition financing. The right package depends on what is being financed, what assets exist, and what risks the lender is trying to manage.
Key steps
- Identify what is being secured and why. Before drafting or signing anything, be clear on the underlying obligation. Is it a term loan, an overdraft, a guarantee of another company's borrowing, or a trade credit line? The nature and size of the obligation should shape the type and scope of security taken, and it should be reflected accurately in the document.
- Map the assets available as security. List what the company actually owns: property, plant, stock, book debts, intellectual property, shares in subsidiaries, cash in bank accounts, and any contracts of value. Some assets may already be charged to another lender, so existing security should be checked on the Companies House register before new documents are prepared.
- Choose the right form of security. Fixed charges suit specific, identifiable assets that the company does not need to deal with freely, while floating charges are used for assets that change over time, such as stock. Personal guarantees from directors, debentures, and share charges may all be combined to give the lender the comfort it needs.
- Negotiate the terms carefully. The covenants, events of default, and enforcement provisions often matter more than the headline interest rate. Watch for cross-default clauses, financial covenants with tight margins, restrictions on further borrowing, and any power for the lender to appoint a receiver on short notice. These clauses can bite hard if trading becomes difficult.
- Execute and register on time. Security granted by a company must usually be registered at Companies House within 21 days of creation, along with the prescribed particulars. Missing this deadline can leave the security unenforceable in an insolvency. Keep signed originals, certified copies, and the certificate of registration in a safe place.
Common questions
Q What is the difference between a fixed and a floating charge?
A fixed charge attaches to a specific asset, such as a property or a named piece of equipment, and the company generally cannot sell or deal with that asset without the lender's consent. A floating charge hovers over a class of changing assets, such as stock or receivables, and only crystallises, fixing onto what exists at that moment, when certain events occur, such as insolvency or enforcement.
Q Does a company have to register security at Companies House?
Most charges created by a UK company must be registered at Companies House within 21 days of creation, using the relevant MR01 form and paying the applicable fee. If the deadline is missed, the security can become void against a liquidator, administrator, and other creditors, even though it may still bind the company itself. Late registration generally requires a court order.
Q What is a debenture in a company lending context?
In UK corporate finance, a debenture is typically a single document in which a company grants a package of security over all its assets and undertaking in favour of a lender, usually a combination of fixed charges over specific assets and a floating charge over everything else. It is the standard form of security banks take from trading companies and often includes wide covenants and enforcement powers.
Q Should directors worry about personal guarantees?
Yes. A personal guarantee shifts risk from the company onto the individual director, meaning personal assets such as savings or a family home can be exposed if the company cannot pay. Guarantees should be read carefully, with attention to caps on liability, the events that trigger a call, and any rights to be released. Taking independent legal input before signing is sensible.
Q What happens to security if the company enters administration?
When a company enters administration, a statutory moratorium usually prevents secured creditors from enforcing without permission, although the administrator will work within the order of priority set by law. Fixed charge holders generally rank ahead of floating charge holders, and a prescribed part of floating charge recoveries is set aside for unsecured creditors. Outcomes depend heavily on the specific facts.
Q Can security be released once a loan is repaid?
Yes. Once the secured obligations have been discharged in full, the lender will usually provide a deed of release or consent to the filing of an MR04 form at Companies House to update the register. It is important to follow through on this, as stale registered charges can complicate future financing, asset sales, and due diligence by new lenders or buyers.
Q Is a security agreement the same as a loan agreement?
No, although they are often signed together. The loan agreement sets out the commercial terms of the borrowing, such as amount, interest, repayment schedule, and covenants. The security agreement, whether a debenture, charge, or guarantee, creates the rights the lender can enforce against assets or third parties if the borrower defaults. Both documents need to be read together to understand the full picture.
Sources
This guide is based on primary UK law and official guidance.
- Guidance · UK GovCompanies House: register a charge (MR01)gov.uk
- LegislationCompanies Act 2006, Part 25 (Company Charges)legislation.gov.uk
- LegislationInsolvency Act 1986legislation.gov.uk
- Guidance · Companies HouseCompanies House filing servicefind-and-update.company-information.service.gov.uk
Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.