A fixed charge attaches to specific assets, while a floating charge attaches to a class of changing assets. For a fixed charge, the borrower cannot deal with the charged asset without permission. For a floating charge, the borrower can deal with assets in the ordinary course of business until default, when the charge crystallizes. To register a charge under the Companies Act 1965, the company must lodge Form 34 and the charge instrument with the Registrar within 30 days. Registration protects creditors by making them aware of charges. If a charge needs to be varied or assigned, Forms 40A or 40B must be lodged. A negative pledge clause in a floating charge contract prevents the company from creating equal or

1. 1) Explain the differencebetween fixed and floating charge
Definition – “ A floating security is intended by the parties to
cover a class of property butnot to attach to specific items
within the class until some futureeventoccurs. Until the event
occurs, the chargor is free to disposeof items within the class
in the ordinary courseof business. That enables a company to
borrow on the security of a stream of assets flowinginto and
out of its ownership.”
A fixed charge is a mortgage on a specific fixed-asset (such as a
parcel of land) to secure the repaymentof a loan. In this
arrangementthe asset is signed over to the creditor and the
borrower would need the lender'spermission to sell it. The
lender also registers a charge against the asset which remains
in forceuntil the loan is repaid.
A floating charge is mortgage on an asset that changes in
quantity or valuefrom time to time (such as an inventory), to
secure the repaymentof a loan. In this arrangement, no charge
is registered against the asset and the owner of the asset can
deal in it as usual. If a defaultoccurs, or the borrower goes into
liquidation, the floating asset 'freezes' into its then current
state 'crystallizing' the floating charge into a fixed charge and
makingthe lender a priority creditor. A floating charge is not as
effective as a fixed charge but is moreflexible.
2) Discussthe procedurein protecting the rights of charge under
CA 65 (includingthe variation of charge) .
A charge is said to be created upon registration, not execution
(Johore ParaRubber v ROC)
Sec 109(1) – Duty to register charge is with company creating the
charge or personsinterested creating the charge.
-default, company or officers guilty of offence.
Luckins v Highway Motel (Carvanon) Ltd

2. - a floating charge mustbe registered if the company wishes
to carry on business even if it has no other assets within the
state.
Purposeof registration – for the protection of the general
creditors & the personsdealingw company, by searching
the register to find outwhether company hascharge or not
(Re Yollan Husson& Birkett Ltd)
To register a charge (Form 34 + copy of stamped instrumentof
charge)  lodge to the ROC  registrar issue ‘certificate of
registration’(Form 40)by virtueof Sec 111(2)  sumtimesdelay n
take time to release form 40  thus, issue ‘letter of release’ (contains
undertakingwhereregistration is notperfected, the solicitor will b
personally liable to chargee).
Where the is need of extensionof time,(may b registeredpassed
30 days)
-can be applied by company/interested personsto the court
-Sec114  court mustbe satisfied that failureto register within time
was dueto a) accidental b)dueto inadvertencec)other sufficient
cause d)notof a natureto prejudicecreditorsor shareholderse)on
the other ground it is just and equitable to grant.
However,
Courtunlikely to grant if,
-company in liquidation
-tak fulfillSec114
-unreasonabledelay w/o justifiable cause
In the event of variation of charge,
**Assignment/refinancingof charge:
**subsequentcharge mustbe registered.
- Sec112A(1)-notice of assignmentof charge (Form40A)
**Variation interim of charge on same property:
-Sec112A(2) – Form40B
**Series of debentures – Sec112

3. -a copy of cert of registration or statement of registration your deed
mustbe endorsed
*Take note: Sec112, only applicable when debentureshas been
issued after charge was registered. Sec108(5) – prior to registration
(series exist b4 registration)
-Sec 115: every company mustkeep instrumentof charge in the
register of charge which is open for inspection for creditors.
-Sec113(1): When charge is paid in part or whole, the company shall
within 14daysafter payment, satisfaction release, lodge a
memorandum of satisfaction (Form41)acknowledgingpaymentof
debt with registrar to enter into Register.
3) Explain the role of ‘negative pledgeclause’.
-It is a term of contract, incorporated into the floating charge.
Whereby the chargor will not sell/deal/charge the assets in priority
or paripassu with the currentcharge.
(prior to crystallization, the chargor can deal with the assets w/out
consent of chargee)
-it is not a security but a contractual right. (because it des not give
creditors any right over asset)
-Breach  will enable the chargee to recall the loan and enforce
repayment.
-Form 34, item7  requires the person fillingthe form to state
whether the creation of subsequentcharges is restricted or
prohibited.
4) Which form of charge is secured crediting.
Charge with collateral assets – secure
Charge based on contract or loan – unsecured
However both can be secured as long as you register.