Section 90 - Meaning of “floating charge”

(1) Subject to subsection (2), a floating charge is an equitable charge over the whole or a specified part of the undertaking and assets of the company both present and future.

(2) A floating charge does not preclude the company from dealing with the assets of the company until,

(a) the security becomes enforceable and the holder of the security pursuant to a power in that behalf in the debenture or the deed securing same, appoints a receiver or manager or enters into possession of those assets;

(b) the Court appoints a receiver or manager of the assets on the application of the holder; or

(c) the company goes into liquidation.

(3) On the happening of an event specified in subsection (2), the charge crystallises and becomes a fixed equitable charge on those of the assets of the company that are subject to the charge.

(4) Where a receiver or manager is withdrawn with the consent of the chargee, or the chargee withdraws from possession, before the charge has been fully discharged, the charge ceases to be a fixed charge and reverts to a floating charge.

(5) A fixed charge on a property has priority over a floating charge affecting that property unless the terms on which the floating charge was granted, prohibited the company from granting a later charge having priority over the floating charge and the person in whose favour that later charge was granted had actual notice of that prohibition at the time when the charge was granted to that person.