COMPANIES ACT - 1963 (ACT 179)

    Section - 87 - Meaning of "Floating Charge"

    (1) A floating charge is an equitable charge over the whole or a specified part of the company's undertaking and assets both present and future, so however that the charge shall not preclude the company from dealing with such assets until,

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

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

    (c) the company goes into liquidation.

    (2) On the happening of any of such events the charge shall be deemed to crystallize and to become a fixed equitable charge on such of the company's assets as are subject to the charge.

    (3) If a receiver or manager is withdrawn with the consent of the chargee, or the chargee withdraws from possession, before the charge has been fully discharged, the charge shall thereupon be deemed to cease to be a fixed charge and again become a floating charge.

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