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ACCA Applied Skills · Corporate and Business Law (Global) · Loan capital

Kappa Ltd's charge to Lumen Bank was registered two weeks after the time limit because of a clerical error. Kappa Ltd is solvent and no other creditor has taken security, but Lumen Bank wishes to rectify the position. Which statement is correct?

The court has power to extend the registration period where the omission was accidental or caused no prejudice to creditors or shareholders, usually imposing protective terms. Late filing alone does not validate the charge, but the defect is not necessarily permanent, so Lumen Bank should apply to the court.

  1. AThe court may extend the time for registration if the omission was accidental or not prejudicial to creditors or shareholders, usually on terms it considers justCorrect
  2. BLate registration automatically validates the charge from the date of creation without any court involvement
  3. COnce the period has expired, the charge can never be validly registered under any circumstances

Explanation

Company law typically allows the court to grant an extension where failure was accidental, inadvertent or not prejudicial to creditors or shareholders, often with conditions protecting intervening rights. Late registration alone does not cure the defect, and the position is not irreversible.

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