Fixed charges vs Floating charges
Transcript:
Hello!
Today we look at the difference between fixed charges and floating charges, but first of all we need to understand what a charge is.
When a company wants financial assistance from a lender, that lender will ask for security to be offered and the company will create a right for the lender on its assets or properties. This right is called a charge. Charges on a company’s assets are made available to the public and must be registered at Companies House or registered in some additional other way. For example, a charge on land and buildings must also be registered at the Land Registry.
There are two types of charges: fixed charges and floating charges.
Fixed charges are charges or mortgages secured on specific property, for example, real estate, a truck, a ship, machinery, shares, intellectual property such as patents, copyrights, trade marks, and so on.
Floating charges, on the other hand, are only available for companies and not for natural persons. Floating charges are (usually) on all the company’s assets both present and future, but the company is allowed to sell or rent or deal with these assets in the ordinary course of business. Very occasionally the charge is over just a certain class of the company’s assets, such as its stock or raw materials. The charge is said to float over the assets charged, rather than fixing on any of them specifically. This continues until the charge ‘crystallizes’, which occurs when the company fails to repay the loan or if the company goes into liquidation. When the charge crystallizes it fixes on the assets owned by the company at that time. Crystallization is the process by which a floating charge converts into a fixed charge.
Remember, it is the company who creates and grants the charge so the company is called the “chargor”, while the bank or other lender is the “chargee” who receives the rights granted.
Thank you very much and see you next time for more Peter’s Pills to improve your Legal English.
Lender – chi dà in prestito
Security – garanzia
Mortgages – ipoteche
Patents – brevetti
Copyrights – diritti d’autore
Trade marks – marchi
Stock – merci in magazzino
See more about law concerning the register of charges in the UK here: “Changes over time for: Cross Heading: The register of charges“.
Legal English – Sommario delle Lezioni
- Legal English – Peter’s Pills – Lesson 59 – Appurtenent vs In gross
- Legal English – Peter’s Pills – Lesson 58 – Building societies and Banks
- Legal English – Peter’s Pills – Lesson 57 – Valid, void and voidable contracts
- Legal English – Peter’s Pills – Lesson 56 – Rescission
- Legal English – Peter’s Pills – Lesson 55 – Golden expressions
- Legal English – Peter’s Pills – Lesson 54 – Pre-emption right vs Right of first refusal
- Legal English – Peter’s Pills – Lesson 53 – What do we mean by “agent” of a company?
- Legal English – Peter’s Pills – Lesson 52 – Voting at a meeting
- Legal English – Peter’s Pills – Lesson 51 – Contracts vs Deeds
- Legal English – Peter’s Pills – Lesson 50 – Executive and Non-Executive Directors
- Legal English – Peter’s Pills – Lesson 49 – Transfer of shares vs transmission of shares
- Legal English – Peter’s Pills – Lesson 48 – They, them, their for singular nouns
- Legal English – Peter’s Pills – Lesson 47 – Jointly and severally
- Legal English – Peter’s Pills – Lesson 46 – Invoice words
- Legal English – Peter’s Pills – Lesson 45 – Quotation
- Legal English – Peter’s Pills – Lesson 44 – Gazumping and Gazundering
- Legal English – Peter’s Pills – Lesson 43 – English words that the English do not understand
- Legal English – Peter’s Pills – Lesson 42 – Easement vs Profit à prendre
- Legal English – Peter’s Pills – Lesson 41 -er, -or and -ee names
- Legal English – Peter’s Pills – Lesson 40 – The Objects Clause
- Legal English – Peter’s Pills – Lesson 39 – When is Latin hot, and when is it not?
- Legal English – Peter’s Pills – Lesson 38 – Default
- Legal English – Peter’s Pills – Lesson 37 – Company Agent
- Legal English – Peter’s Pills – Lesson 36 – Injunction (false freind)
- Legal English – Peter’s Pills – Lesson 35 – Mortgage
- Legal English – Peter’s Pills – Lesson 34 – Freehold, Leasehold and Commonhold estates
- Legal English – Peter’s Pills – Lesson 33 – Transferor, Transferee and Transmittee
- Legal English – Peter’s Pills – Lesson 32 – Tax evasion, tax mitigation and tax avoidance
- Legal English – Peter’s Pills – Lesson 31 – Numbers
- Legal English – Peter’s Pills – Lesson 30 – Ordinary resolutions vs special resolutions
- Legal English – Peter’s Pills – Lesson 29 – AGM vs EGM
- Legal English – Peter’s Pills – Lesson 28 – A going concern
- Legal English – Peter’s Pills – Lesson 27 – Collocations: Violate, breach, break, disobey and infringe
- Legal English – Peter’s Pills – Lesson 26 – Company meeting words
- Legal English – Peter’s Pills – Lesson 25 – Mortgagor vs Mortgagee
- Legal English – Peter’s Pills – Lesson 24 – Fixed charges vs Floating charges
- Legal English – Peter’s Pills – Lesson 23 – Doctrine
- Legal English – Peter’s Pills – Lesson 22 – Construe
- Legal English – Peter’s Pills – Lesson 21 – Sign vs Execute
- Legal English – Peter’s Pills – Lesson 20 – The closing statement
- Legal English – Peter’s Pills – Lesson 19 – Writing Business Emails
- Legal English – Peter’s Pills – Lesson 18 – Limited companies
- Legal English – Peter’s Pills – Lesson 17 – Annual Accounts
- Legal English – Peter’s Pills – Lesson 16 – Meetings
- Legal English – Peter’s Pills – Lesson 15 – Attorney-at-law vs Attorney-in-fact
- Legal English – Peter’s Pills – Lesson 14 – Here and there compounds
- Legal English – Peter’s Pills – Lesson 13 – Subject Matter
- Legal English – Peter’s Pills – Lesson 12 – The clear days rule
- Legal English – Peter’s Pills – Lesson 11 – Shareholder, Member or Holder of shares?
- Legal English: Peter’s Pills – Lesson 10 – Competition Law
AUTORE
Peter Liebenberg è uno specialista nella formazione delle persone nella conoscenza della lingua inglese. Ha creato molti corsi nel campo dell’inglese per professionisti, tra cui English for banking, English for business e English for Insurance, ma ha sempre avuto un debole per l’inglese legale. Altri corsi che ha creato comprendono Phrasal Verbs I e II. Quando Peter non fa formazione, corre a Parco Sempione, crea arte nel suo studio sulla Martesana e fa volontariato.