Companies House Charge Over IP: s.859A Guide

Miss a single deadline and your carefully drafted security over a company's intellectual property can collapse into worthless paper. Under section 859A of the Companies Act 2006, a charge created by a UK company must be registered at Companies House within 21 days of its creation — or it is void against a liquidator, an administrator, and any other creditor of the company. The debt survives; the security does not. For a lender advancing against patents, software, or brands — assets that may represent the bulk of an SME's enterprise value — a lapsed registration is the difference between a secured claim and a place at the back of the unsecured queue.

This guide walks an SME founder and their adviser through how security over IP is actually created and perfected: choosing between a legal mortgage, a fixed charge, and a floating charge; meeting the mandatory 21-day Companies House filing under s.859A; recording the interest at the UK Intellectual Property Office (IPO); and understanding where you sit in the insolvency waterfall if things go wrong.

Why a charge over IP even arises

IP-backed lending is no longer theoretical in the UK. NatWest launched its High Growth IP Loan in January 2024 — the first UK high-street bank to lend directly against intellectual property — offering £250,000 to £10 million at up to roughly 50% of appraised IP value, with the assets valued and revalued annually by an independent valuer. HSBC UK assesses IP within a £250m growth-lending fund extending to £15m per facility. Across the broader market, indicative loan-to-value (LTV) ratios typically sit in the 20–40% range, reaching up to around 50% where insurance backing is present. These are indicative ranges, not commitments — every facility is underwritten on its own merits.

Crucially, for these lenders IP is a fallback form of security. The bank takes a charge over the IP so that, if the borrower defaults and conventional security is exhausted, there is a defined, registrable asset to realise. That charge only does its job if it is created correctly and perfected on time. For the wider mechanics of how banks assess these facilities, see the IP-Backed Loans UK hub and the detail on NatWest IP-backed loans.

How security over IP is created

Not all security is equal. UK lenders and their counsel choose among three principal instruments, ranked here from strongest to weakest for the lender.

Forms of security over intellectual property

Registered rights carry more weight than unregistered ones because they can be pinned to a specific charge and searched by a lender. That is one reason a clean, documented chain of title matters so much: contractor and employee-created IP must have been properly assigned to the company before it can be charged. The Security & charges over IP standard sets out how lenders expect these instruments to be structured, and the IP collateral due-diligence checklist covers the encumbrance searches — at both Companies House and the UK IPO — that reveal prior charges.

Perfecting the charge: the s.859A registration

Creating the charge is only half the job. Section 859A of the Companies Act 2006 requires that a charge created by a UK company be delivered to the Registrar of Companies, with the prescribed particulars and a certified copy of the instrument, within 21 days beginning with the day after the charge is created.

Get this right and Companies House issues a certificate of registration that is conclusive evidence the filing was made in time. Get it wrong and section 859H bites: the charge is void against a liquidator, an administrator, and any creditor of the company — and, worse, the money secured becomes immediately payable.

Two practical points advisers repeatedly get caught by. First, the 21 days run from creation of the charge, which is usually execution of the instrument — not from when the loan draws down. Second, registering at Companies House does not replace recording the interest at the UK IPO. For registered patents and trade marks, the security interest should also be recorded on the relevant IPO register so that third parties searching the register are put on notice and the lender's priority is protected. Both steps are part of a complete perfection process.

Where you rank if it all goes wrong

If the borrowing company enters insolvency, the order in which claims are paid — the "waterfall" — determines who actually recovers value. This is why the type of charge, and whether it was perfected, matters so much.

Indicative insolvency priority (highest to lowest)

A lender with a properly perfected fixed charge by patent number sits at the top of the queue for that asset. A lender relying on a floating charge ranks below preferential creditors and gives up a slice to the prescribed part. And a lender whose charge was never validly registered under s.859A drops out of the secured ranks entirely — into the unsecured tier at the bottom. The instrument you choose and the deadline you meet together determine your recovery. The Lender's guide and Borrower's guide both explain how this priority shapes the terms on offer.

How valuation sets the LTV behind the charge

A charge is only as useful as the realisable value of the asset behind it. UK IP valuations for secured lending follow IVS 210 (Intangible Assets), with the 2025 edition of the International Valuation Standards renumbering the reporting standard to IVS 106 and bases of value to IVS 102. RICS guidance — its "Valuation of IP rights" material and Red Book VPGA 6 — directs valuers to use an orderly-liquidation or forced-sale premise for collateral, and never to let a single "most likely" figure obscure the downside; sensitivity analysis and ranges are expected.

The income methods a valuer may apply — Relief-from-Royalty (RFR), Multi-Period Excess Earnings (MPEEM) after contributory-asset charges, and With-and-Without (W&W), alongside Cost, Market, and DCF approaches — are asset-level IVS 210 techniques, distinct from investment-level IPEV methods used to value a fund's holding. Conservative inputs are the norm for lending: a low-end royalty rate, a risk-premium-adjusted discount rate, a finite economic life, and a cautious terminal value.

For the underlying methodology, see Valuing IP for secured lending and the glossary entries on orderly liquidation value and collateral suitability.

Serviceability: the charge is the fallback, not the plan

Lenders repay themselves from cash flow first and collateral second. Operating cash flow is the primary repayment source; the charge over IP is the secondary, fallback route. Expect to provide 2–3 years of statutory accounts, current management accounts, a forecast, and — for IP-backed facilities — around three years of projections with sensitivity analysis. The debt-service coverage ratio (DSCR) — net operating income divided by total debt service — is the headline serviceability test; a figure below 1.0 signals a shortfall, and minimums of roughly 1.20–1.25× are common indicative thresholds. See Serviceability & DSCR and the FAQ on how much you can borrow against your IP.

A pre-charge checklist for founders and advisers

Before a lender will take — and rely on — a charge over your IP, assemble the evidence that makes the security registrable and realisable:

• Clean, unencumbered title with a documented chain of title (all contractor and employee IP assigned to the company).
• An independent IP audit confirming the rights are in force (renewals paid).
• Encumbrance searches at both Companies House and the UK IPO.
• A collateral valuation on an orderly-disposal premise, with ranges and sensitivities.
• A plan to file at Companies House within 21 days of creating the charge — and to record it at the UK IPO.

Advisers preparing a client can follow Preparing a client for an IP-backed loan and Building the collateral evidence pack; the wider IP finance for advisers hub ties the workflow together.

Bring the evidence together before you sign

A charge over IP only protects a lender if the asset is real, the title is clean, the valuation is defensible, and the s.859A filing lands inside 21 days. Assembling that — the register of assets, an orderly-disposal valuation, the collateral-suitability view, and the financials — is exactly what a lender's credit committee wants to see in one pack. Start by getting an IVS-aligned valuation, then use the Lending Readiness Report to package the register, valuation, and collateral assessment your bank will ask for. Get the security created and perfected — and keep your charge on the right side of the liquidator.