A receivership begins privately, by a written appointment between a chargeholder and its appointee. Sections 259, 260 and 278 of the Companies Act 1997 make it public.
Section 259 — notice of appointment
(a) give written notice of the appointment to the company; and
(b) give public notice of the appointment, including —
(i) the receiver’s full name; and
(ii) the date of the appointment; and
(iii) the receiver’s office address; and
(iv) a brief description of the property in receivership; and
(c) submit a notice of appointment in the prescribed form to the Registrar.
Where the appointment is in addition to a receiver who already holds office, or in place of a person who has vacated office, every notice under this section shall state that fact.
Under section 259(3), a receiver who contravenes the section commits an offence and is liable on conviction to the penalty in section 413(2).
Section 259 requires notice to the company and to the world at large. It does not require the receiver to write to each creditor. Unsecured creditors learn of the receivership from the public notice, or from the statement on documents required by section 260.
They do, however, have a right to ask for the reports: under section 276(3), a creditor, director or surety of the company, or any person with an interest in the property in receivership, may request a copy of any report prepared under section 273 or 274, and the receiver must supply it within 21 days on payment of reasonable copying costs.
“Brief description of the property in receivership” matters to anyone dealing with the company. Where the appointment is under a fixed charge over one asset, the rest of the business continues under board control; where it is over the whole undertaking, effectively nothing does.
Section 260 — notice on the company’s documents
(1) Where a receiver is appointed in relation to a specific asset or specific assets, every deed or agreement entered into, and every document issued, by or on behalf of the company or the receiver that relates to that asset or those assets and on which the name of the company appears, shall state that a receiver has been appointed.
(2) Where a receiver is appointed in any other case, every deed or agreement entered into, and every document issued, by or on behalf of the company or the receiver on which the name of the company appears, shall state that a receiver has been appointed.
| Appointment | Which documents must carry the statement |
|---|---|
| Specific assets — s 260(1) | Only documents relating to those assets on which the company’s name appears |
| All or substantially all assets — s 260(2) | Every deed, agreement and document on which the company’s name appears — invoices, letterhead, purchase orders, contracts, emails bearing the name |
(3) A failure to comply does not affect the validity of the deed, agreement or document.
(4) But every person who contravenes subsection (1) or (2), or knowingly or wilfully authorises or permits a contravention, commits an offence, penalty under section 413(1).
Note the breadth: the obligation falls on the company and the receiver, and the offence catches every person who contravenes or who knowingly or wilfully authorises or permits a contravention. Directors who keep issuing unmarked invoices are exposed, as are employees who do so on instructions.
Anyone giving credit to a company in receivership needs to know. The receiver is personally liable under section 281(1)(a) on contracts they enter into, but the company’s own trading — conducted by directors outside the property in receivership — carries no such assurance.
The obligation is a close cousin of section 30, which requires the company’s name on its documents in the first place, and of section 309, which imposes the equivalent requirement once a company is in liquidation.
Section 278 — notice of the end of the receivership
(1) Not later than 14 days after the receivership of a company ceases, the person who held office as receiver at the end of the receivership shall submit to the Registrar notice in the prescribed form of that fact.
(2) Failure to comply is an offence, penalty under section 413(2).
Under section 274(1)(b), a final report must be prepared not later than two months after the date on which the receivership ends, summarising the state of affairs and the conduct of the receivership including all amounts received and paid. Under section 276(4) a certified copy goes to the Registrar within seven days of preparation.
So the sequence at the end of a receivership is: 14 days — notice of cessation to the Registrar; two months — final report prepared; seven days after that — certified copy filed. The accounting records must then be retained for seven years under section 272(2).
The notice timeline
| When | What | Section |
|---|---|---|
| 7 days from appointment | Notice to the company, public notice, notice to the Registrar | 259 |
| From appointment onward | Every relevant document to state that a receiver has been appointed | 260 |
| 14 days from appointment | Practical cut-off for terminating employment contracts and for rent liability to begin | 281(1)(b), (6) |
| 2 months from appointment | First report | 273 |
| Every 6 months, reported within 2 months | Further reports | 274(1)(a) |
| 14 days from a vacancy | Notice of vacancy to the Registrar | 261(4) |
| 14 days from the receivership ceasing | Notice of cessation to the Registrar | 278 |
| 2 months from the receivership ending | Final report | 274(1)(b) |
| 7 years after the receivership ends | Retain accounting records | 272(2) |
Every one of these obligations is backed by an offence provision. Under section 413, the penalties are fixed by reference to whether the default is a subsection (1) or subsection (2) default, and under section 416 the general penalty provisions apply where no specific penalty is stated.
Sources
- Companies Act 1997 — ss 30, 259, 260, 261, 272–278, 281, 309, 413, 416
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.