6.4 Company charges

6.4 COMPANY CHARGES

Company charges refer to a form of security interest or lien created by a company over its assets to secure the repayment of a debt or obligation. These charges provide a measure of protection for lenders and creditors by granting them a claim on specific assets of the company in case of default.

Types of charges

1. Fixed charges: They are created over specific assets of the company that are identified and defined in the charge document.
2. Floating charges: They are created over a class of assets that may change in nature and value over time.

Crystallization of floating charges. A floating charge “crystallizes” upon the occurrence of specific events defined in the charge document, such as default on the loan, insolvency of the company, or other trigger events.