A fixed charge is one which creates legal interest of a specific property of the company or all the properties of the company. Thus a fixed charge is equivalent to mortgage. The company can sell, lease etc. of the property, subject to the right of the charge holder.
The floating charge does not amount to mortgage. The owner of such a property can deal with it and the transferee gets it, free of the charge.
The floating charge crystallize on happening of the following events-
1. Inability of the company to pay interest for 3 months.
2. When the court issues warrant for confiscation properties for 7 days
3. When the receiver of the company is appointed on application of debenture holders.
4. When the liquidation process of the company commences.
Posts
0 comments:
Post a Comment