When you check a company on ScoutCompany, you'll often see a section called Charges. If you're not familiar with company law, charges can look alarming — but they're a normal part of business finance. Here's what they mean and when they should worry you.
A charge is a form of security interest granted by a company to a lender. In plain English: it means the company has borrowed money and the lender has a legal claim over some or all of the company's assets until the debt is repaid.
Charges must be registered at Companies House within 21 days of being created. If they're not, the charge may be void against liquidators and creditors — which is why lenders are diligent about registration.
There are two main types:
A fixed charge is attached to a specific asset — a property, a piece of machinery, a vehicle, or intellectual property. The company can't sell or dispose of the asset without the lender's permission. If the company defaults, the lender can seize and sell that specific asset to recover the debt.
Example: A construction company takes out a loan to buy a JCB digger. The bank registers a fixed charge against the digger. Until the loan is repaid, the bank has first claim on that machine.
A floating charge "floats" over a class of assets that change over time — typically stock, raw materials, or the company's general assets. The company can use and trade these assets freely in the normal course of business. The charge only "crystallises" (becomes fixed) if the company defaults or enters insolvency.
Example: A retailer borrows against its inventory. The charge floats over the stock — as products are sold and replaced, the charge moves with the stock. If the retailer defaults, the charge crystallises over whatever stock exists at that moment.
In UK company law, a mortgage is technically a type of charge where legal ownership of the asset is transferred to the lender until the debt is repaid. In practice, the terms are often used interchangeably, and Companies House lists both under "charges."
The practical difference is minimal for due diligence purposes — both represent a debt secured against company assets.
Charges themselves aren't a red flag. Most growing companies use secured borrowing. The questions to ask are:
Every company profile on ScoutCompany includes a Charges section showing the total number, how many are outstanding versus satisfied, and the details of each charge — the lender, the asset class, and when it was created and (if applicable) satisfied.
If a company has outstanding charges, the risk dashboard shows a clearly marked card — helping you spot potential debt issues at a glance.