What is a charges?

  • A charges is the security that a company gives a loan, such as mortgages.
  • The term ‘charges’ refer security given by a company over some or all its assets in favour of a creditor.
  • There is 2 types of charges being defined : fixed charge and floating charges.

Fixed charges

  • A fixed charge is a charge or mortgage secured on particular property, e.g land, machinery and etc.
  • Often occurs when a company takes out a loan to acquire assets such as a building or a car.
  • The company cannot sell this charge without the consent of the lender and need to repay the debt according to the loan agreement.

 

Floating charges

  • Covers the company’s asset as a whole
  • Lender able to recover money when the assets being sold to 3rd party
  • Commonly create by tangible and intangible assets such as cash in hand, stock, raw material and etc.
  • The floating charges allows the company to borrow even though they have no specific assets such as freehold premises.

Registration of charges

  • Under Companies Act 2016 Section 352(1), 354 & 356 :
  1. The charges need to be lodged within 30 days from the date of creation of the charge / acquisition of property which is subject to a charge.
  2. The document that is lodged after 30 days from the date of acquisition / creation of the charge cannot be registered unless accompanied by a Court order for extension of time.

Registration of assignment or variation of charge :

Under Companies Act 2016

  • Section 359(1) : Notice of Assignment of charge
  • Section 359(2) : Notice of Variation in terms of charge
  • Needs to be lodged within 30 days from the date of assignment of charge / date of the variation in terms of charges
  • There will be a fee for the late lodgement needs to be included

 

Registration of satisfaction and release of charges

  • Under Companies Act 2016 Section 360

When the debt for charge has been paid or satisfied, the documents that need to be lodged for release of property charged are:

  1. Memorandum where property is released from Registered Charge   
  2. Evidence of release of property or satisfaction of charge                              
  3. Statutory declaration verifying memorandum                                                 

Registration of satisfaction and release of charges  (Con’t)

The lodgement of the release of charge :

  • Need to be lodged within 14 days from the date of release of charges or satisfaction of charges
  • Only 1 charge number to be discharge per set of documents
  • There will be a fee for the late lodgement needs to be included
  • Documents that are in order will be registered and the Certificate for the discharge of charges will be issued