Equity of redemption meaning

Scope of this Checklist This Checklist sets out the points to consider when a company is proposing to grant a mortgage. It proceeds on the basis that an English or Welsh company will be granting a mortgage to a lender situated in England or Wales. In this Checklist: the company granting the mortgage is the 'mortgagor' the party to whom the mortgage is granted is the 'mortgagee' the document recording the mortgage is the 'security document' Preliminary questions before taking security by way of a mortgage Is a mortgage the right method of taking security? A mortgage transfers title to the asset, while preserving the mortgagor's equity of redemption so that, once sums due have been paid in full, title can be transferred back to the mortgagor (note that some mortgages, such as over land, are statutory, meaning there is no transfer of title). The use and possession of the asset will remain with...

Banking & Finance—October 2024 case round-up Brierley v Otuo and others [2024] EWHC 2549 (Ch) — Security: cost recovery on legal mortgages The court refused the mortgagee’s appeal against a 28 July 2023 order that barred recovery of sale and enforcement costs on specified properties. The decision followed the established rule on legal mortgages set out in Fisher & Lightwood’s Law of Mortgage (paragraph 55.6). Put simply, unless the mortgage contains an express term, there is no implied duty on the mortgagor to pay the mortgagee’s costs, charges and expenses, so they cannot be recovered from the mortgagor personally, save where personal liability has arisen in the particular case. Nevertheless, those costs are rolled into the secured indebtedness and, as against the mortgagor and anyone with an interest in the equity of redemption, they are treated as part of the amount owing under the security and must be satisfied as a condition of redemption......

Lexham Securities Ltd and another v Earlsfort Capital Partners Ltd and others [2023] EWHC 909 (Ch) What are the practical implications of this case? This decision confirms that a mortgagor may still exercise the equity of redemption even after a receiver has concluded a contract on their behalf. Historically, it has been accepted that the equity of redemption is, for a period, put on hold between the making of a sale contract by the mortgagee and the subsequent completion of that contract (see Property and Bloodstock Ltd v Emerton [1968] Ch. 94). The situation is, in practice, different where the sale contract is made by a receiver. Although the receiver is appointed by the mortgagee, the receiver acts as the owner/mortgagor’s agent, not the mortgagee’s. That almost invariably follows from the provisions of the original loan agreement; agreed at the outset, at a time when the mortgagor hopes and expects to comply with the loan terms. Consequently, in National Westminster Bank plc v Hunter [2011] EWHC 3170 (Ch) (‘Hunter’),...

Nosnehpetsj Ltd (in liquidation) v Watersheds Capital Partners Ltd and another [2020] EWHC 1938 (Ch), [2020] All ER (D) 144 (Jul) What are the practical implications of this case? The key takeaway is that directors will generally be held to the content of confirmation statements, accounts and, for the period before 2016, annual returns. Many private companies operate with a degree of informality, and directors sometimes shift assets within a small group merely by reflecting the transfers in those filings. A director who acts in that way is unlikely to be allowed to step back from those actions by asserting that corporate formalities were not observed, particularly where third parties have relied on the records or one group company has gone into insolvency. The old saying that equity will not assist a volunteer carries limited weight in corporate contexts. The modern stance is that equity will not go out of its way to thwart a gift. Contemporaneous records will be preferred over after-the-event assertions by directors. The decision also...

STOP PRESS ECCTA 2023 introduces identity verification for anyone submitting filings at Companies House. This is expected to become mandatory from November 2026. See: Registering Security at Companies House—changes under ECCTA 2023 for further details and timing. STOP PRESS On 16 March 2026, Companies House announced that on Friday 13 March it had been alerted to a security issue. A logged-in WebFiling user could, after following a specific sequence of actions, potentially view and amend certain elements of another company’s information without consent. Companies House has said that existing filed documents—such as accounts or confirmation statements—could not have been changed. There is, however, a risk that some personal data may have been accessed and that unauthorised submissions may have been made. Although information is currently limited, this could include, for example, a satisfaction of charge filing. Companies House has advised companies to review their registered particulars and filing history. Lenders may wish borrowers to confirm that these checks have been completed and that everything is in order....

This Practice Note serves as a primer on corporate and company law (together ‘Corporate’) for trainee solicitors and anyone newly entering the Corporate practice area. It concentrates on foundational ideas and directs you to Lexis+ resources for more detail on each subject. You can also use the Overviews within each subtopic, which summarise the law on specific issues or stages of Corporate transactions and include links to relevant material within that subtopic to aid navigation. When viewing subtopics in Corporate ‘Topics & Tasks’, you will find these Overviews alongside further practice area content. If this introductory guide does not address a point, browse additional materials via the Topics tab or the Topics dropdown menu. To read about the team of experienced lawyers and expert authors who contribute to the Corporate module, see the Corporate experts page. Companies and other forms of business vehicle Choosing an appropriate business vehicle requires consideration of a range of legal, tax and commercial factors, weighing their respective advantages and disadvantages. For more detail...

STOP PRESS: A major overhaul of the UK listing regime took effect on 29 July 2024, abolishing the premium and standard segments and introducing a single listing category for equity shares in commercial companies. This commercial companies category is strongly disclosure-led and sits alongside other categories, including the following listing categories: shell companies secondary listing closed ended investment funds A new UK Listing Rules sourcebook implemented these changes and the previous Listing Rules sourcebook was revoked. For more detail, see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note reflects the regime as it stood before 29 July 2024. A limited company intending to redeem redeemable shares must comply with the Companies Act 2006 (CA 2006). In addition to CA 2006, there are further rules and guidance relevant to a listed company or an AIM company. In particular, a listed company must have regard to the Listing Rules (LRs) and the Disclosure Guidance and Transparency Rules (DTRs)...

£ [ insert number ] [ insert rate ]% convertible [ subordinated ] redeemable loan notes 20[ insert year ] [ insert name of issuer ] Dated [ insert day and month ] 20[ insert year ] Parties [ Insert name of issuing company ], incorporated in England and Wales under number [ insert company number ], whose registered office is at [ insert address ] (the Issuer) Background The Issuer has determined to create up to a maximum nominal amount of £[ insert number ] [ insert rate ]% convertible [ subordinated ] redeemable loan notes, to be constituted as set out in this document...

Companies Act 2006 — Private Company Limited by Shares — Articles of Association for [ insert name of company ] Limited (Incorporated in England and Wales under registered no. [ insert number ]) (Adopted by special resolution passed on [ insert date ] 20[ insert year ]) 1 Model Articles 1.1 The Model Articles will govern the Company save where these Articles alter, disapply or conflict with them; subject to any such variations, exclusions or inconsistencies, the Model Articles together with these Articles form the Company’s articles of association, to the exclusion of any other articles or regulations contained in any statute, statutory instrument or other subordinate legislation... 1.2 The following provisions of the Model Articles shall not apply to the Company: 11(2) (quorum for directors’ meetings), 12 (chairing of directors’ meetings), 13 (casting vote), 14(1)–(5) (conflicts of interest), 21 (all shares to be fully paid up), 26(5) (share transfers), 30(5)–(7) (procedure for declaring dividends), 39 (chairing general meetings), 42 (voting: general), 44(2) (poll votes), 50 (no...

Companies Act 2006 Private Company Limited By Shares Articles of Association of [ insert name of company ] Limited (incorporated in England and Wales under registered no. [ insert number ]) (adopted by special resolution on [ insert date ] 20[ insert year ]) 1 Model Articles Except to the extent that these Articles amend, disapply or conflict with them, the Model Articles apply to the Company and, subject to any such amendments, disapplications or inconsistencies, they shall, together with these Articles, form the Company’s articles of association, to the exclusion of any other articles or regulations contained in any statute, statutory instrument or other subordinate legislation. Model Articles 11(2) (quorum for directors’ meetings), 12 (chairing of directors’ meetings), 13 (casting vote), 14(1)-(5) (conflicts of interest), 21 (all shares to be fully paid up), 26(5) (share transfers), 30(5)-(7) (procedure for declaring dividends), 39 (chairing general meetings), 42 (voting: general), 44(2) (poll votes), 50 (no right to inspect accounts and other records), 51 (provision...