Security
Debenture
A debenture is the document that gives a lender security over substantially all of a company's assets. It reaches the public register within 21 days, and it stays there after repayment unless someone files to remove it.
Also called fixed and floating charge · MR01 · company charge · security document · all-assets security
A debenture usually contains both charge types. Which one attaches depends on whether the asset stays put or turns over.
| Asset class | Usual charge type |
|---|---|
| Stock and work in progress | Floating |
| Book debts and cash | Contested |
| Plant and machinery | Often fixed |
| Land and buildings | Fixed |
General position in UK lending. The characterisation of a charge is a legal question on the facts, not a matter of labelling.
What the document does
A debenture is the security document a lender takes over a company's assets. The most common form contains both a fixed charge over the company's durable assets and a floating charge over everything else, which is why it is often described as all-assets security.
For a cashflow lender at £3-15m the standard package is a debenture over the company plus a charge over its shares. That combination matters: the debenture reaches the assets, and the share charge reaches control of the company that owns them, which in practice is the more useful of the two if things go wrong.
Granting a debenture is ordinary and is not a signal of distress. Almost every leveraged or cashflow facility in the UK lower-mid-market is secured this way.
Fixed against floating
A fixed charge attaches to a specific, identified asset. The company cannot dispose of it without the lender's consent, which is why fixed charges suit assets that stay put: land and buildings, plant and machinery, intellectual property.
A floating charge hovers over a class of assets that changes constantly, most obviously stock and work in progress. The company deals with them freely in the ordinary course of business until the charge crystallises, at which point it fixes on whatever is in that class at that moment.
Book debts and cash at bank sit in a contested middle. Whether a charge over them is fixed or floating depends on the degree of control the lender exercises in practice, not on what the document calls it. Labelling a charge fixed does not make it fixed, and the distinction matters because fixed-charge holders rank ahead of preferential creditors and the prescribed part in an insolvency, while floating-charge holders do not.
The charge is created at completion and must reach the register within 21 days. Miss it and the security is at risk.
| Stage | Timing |
|---|---|
| Charge created | Completion |
| MR01 filed in practice | Days 2-7 |
| Statutory deadline | Day 21 |
| Court order territory | After day 21 |
GOV.UK guidance: registration within 21 days of creation, with a certified copy placed on the public file.
Registration, and the 21-day rule
A charge created by a UK company must be registered at Companies House within 21 days of creation, using form MR01, and a certified copy of the instrument goes on the public file where anyone can read it.
The consequence of missing the window is severe rather than administrative. An unregistered charge is generally void against a liquidator, an administrator and other creditors, meaning the lender falls back to being unsecured in the situation where the security mattered most. Registration after the deadline usually requires a court order.
In practice solicitors file within the first few days after completion, so the deadline is rarely a live risk on an advised transaction. It becomes one on informal arrangements: a director's loan documented in a hurry, or security granted in a side letter that nobody treats as a chargeable event.
The public file, and what a borrower should read from it
Because the certified copy is public, your security package is visible to anyone who looks: competitors, customers, prospective lenders, and anyone doing diligence on you. That is a fact of the system rather than a problem, but it is worth knowing that the terms of your facility are less private than the facility agreement implies.
It also runs the other way. Before approaching lenders, read your own charge register the way a credit team will. It shows every charge ever registered against the company, who holds it, when it was created, and whether a satisfaction has been filed.
A file thick with unsatisfied historic charges reads badly and invites questions you would rather answer in advance. It is also, frequently, wrong.
Why repaid charges stay on the register
This is the point most borrowers do not know and it causes real friction. Filing a satisfaction on form MR04 is voluntary. Repaying the loan does not clear the charge from the public file, and nothing obliges the lender to do it either.
So the register systematically overstates how much live security exists. A company that has refinanced three times can carry three outstanding-looking debentures when only one secures anything. A new lender reading that file has to establish which are live, which means correspondence with old lenders, which takes weeks.
The fix is cheap and worth doing before a raise rather than during one. The historic charges need identifying, with confirmation from each old lender that the debt is repaid and the security released, and file MR04 for each. Doing this early removes a whole category of diligence delay, and it is one of the few pieces of pre-raise housekeeping that costs almost nothing.
An old charge on your file is not proof of old debt. Satisfaction filings are voluntary, so repaid security lingers.
| Step | Effect on the file |
|---|---|
| Deed of release | Discharges security |
| MR04 satisfaction filed | Clears the file |
| MR04 not filed | Charge stays visible |
| Repayment alone | Register unchanged |
Source: the debentures guide: MR04 satisfaction filings are voluntary, which is why the register overstates live security.
Negative pledges and second charges
Almost every debenture contains a negative pledge: a covenant not to grant further security over the same assets without the existing lender's consent. It appears on the public file alongside the charge, so a prospective second lender sees it before they speak to you.
That has a practical consequence. A business with a debenture in place cannot simply add asset finance or an invoice facility on top; it needs the incumbent's consent, and the incumbent has every incentive to take their time or to price the consent.
Where a second lender is going to take security anyway, the parties usually sign a deed of priority regulating who ranks where and who may enforce first. Negotiating that deed is often slower than negotiating the new facility itself, because it involves a lender who is not gaining anything from the transaction. If a second facility is in contemplation, raise it with the incumbent early rather than presenting it as a fait accompli.
Enforcement, and what the floating charge really buys
A lender holding a qualifying floating charge can appoint an administrator out of court, under the Insolvency Act 1986. That is a significant power, and it is one of the main reasons lenders want the floating charge element rather than settling for fixed charges over the valuable assets alone.
In practice the power is used rarely. Enforcement destroys value in a trading business, and a lender who accelerates and enforces almost always recovers less than one who works the situation out. The security only bites if the relationship breaks down entirely.
The realistic way to read a debenture is therefore as leverage rather than as an execution plan. It shapes who has the strongest voice in a difficult conversation, and it is exercised as a threat far more often than as an action.
Releases at completion
On a refinancing, the incumbent lender releases their security and the new lender takes theirs, usually on the same day. Getting that choreography right is a completion mechanic that borrowers should track rather than assume.
The sequence to confirm is that the old lender has agreed a redemption figure and confirmed release on receipt, that the deed of release is prepared and ready to sign, that the new debenture is executed, and that MR04 is filed for the old charge as well as MR01 for the new one.
The failure mode is undramatic and common: everything completes, the new charge is registered, and nobody files the satisfaction for the old one. Two years later the next lender starts diligence on a company that appears to have two debentures, and the same conversation happens again.
Common questions
What is a debenture in UK lending?
The security document a lender takes over a company's assets. The most common form contains both a fixed charge over durable assets and a floating charge over everything else, which is why it is often called all-assets security. For a cashflow facility at £3-15m the standard package is a debenture plus a charge over the company's shares.
What is the difference between a fixed and a floating charge?
A fixed charge attaches to specific assets that cannot be disposed of without consent, such as land, plant or intellectual property. A floating charge hovers over a class of assets that turns over, such as stock, until it crystallises. Book debts and cash sit in a contested middle where characterisation depends on the control the lender exercises in practice, not on what the document calls it.
How long do I have to register a charge?
Twenty-one days from creation, on form MR01, with a certified copy going on the public file. Missing it is serious rather than administrative: an unregistered charge is generally void against a liquidator, administrator and other creditors, and late registration usually needs a court order.
Why is an old charge still showing against my company?
Because filing a satisfaction on form MR04 is voluntary. Repaying the loan does not clear the charge from the register, and the repaid lender has little incentive to file. A company that has refinanced several times can show several outstanding-looking debentures when only one secures anything.
How do I clear a repaid charge from the register?
Obtain confirmation from the old lender that the debt is repaid and the security released, then file form MR04. It costs almost nothing and is worth doing before a raise rather than during one, because it removes a category of diligence delay while a new lender establishes which of your charges are live.
Can I grant a second charge over the same assets?
Usually not without consent. Almost every debenture contains a negative pledge preventing further security without the existing lender's agreement, and it is visible on the public file. Where a second lender does take security, the parties normally sign a deed of priority, which is often slower to negotiate than the new facility itself.
What can a lender do with a floating charge?
A qualifying floating charge holder can appoint an administrator out of court under the Insolvency Act 1986, which is one of the main reasons lenders want the floating element rather than fixed charges alone. In practice the power is used rarely, because enforcement destroys value in a trading business and usually recovers less than a workout.
Is granting a debenture a bad sign?
No. It is entirely ordinary: almost every leveraged or cashflow facility in the UK lower-mid-market is secured this way. What is worth attention is not the fact of the debenture but its terms, particularly the negative pledge, and keeping the public register accurate once facilities are repaid.
The full treatment sits in the guide: debentures and charges explained.
This page explains a term as it is used in the UK lower-mid-market. It is general information, not advice on any particular facility. Terms vary between lenders and between deals, and the drafting in your own agreement governs.