Get premium membership and access questions with answers, video lessons as well as revision papers.
Advantages of floating charge
- enables a company without fixed assets to borrow
- enhances the borrowing capacity of the companies with fixed assets
- enables a company to use future assets as current collateral
- the charge does not prevent the company from carrying on business as it is free to sell and acquire new stock
Disadvantages of floating charge
- the value of the charge remains unknown since the company carries on business
- a fixed charge is given more priority to the floating charge
- a floating charge created 6 months before commencement of liquidation is treated as null and void
Crystallization of a floating charge
- When the company ceases to be going concern.
- Upon commencement of recovery proceedings against the company.
- When a receiver is appointed a debenture holder pursuant to the terms of a debenture or the court on application.
- Failure to pay the principle or interest when due and payable provided the chargee takes some steps to enforce the security
-Occurrence of an event which under the terms of the debenture causes crystallization.
When a floating charge crystallizes it becomes a fixed charge
iann answered the question on March 14, 2022 at 13:46
- Imprisonment is one of the penalties for non-compliance. TRUE or FALSE?(Solved)
Imprisonment is one of the penalties for non-compliance. TRUE or FALSE?
Date posted: April 15, 2021. Answers (1)
- What part of the Companies Act relates to foreign companies?(Solved)
What part of the Companies Act relates to foreign companies?
Date posted: April 15, 2021. Answers (1)
- Outline the roles of International Financial Reporting Standards in preparation of financial statements.(Solved)
Outline the roles of International Financial Reporting Standards in preparation of financial statements.
Date posted: April 15, 2021. Answers (1)
- State the similarities between debentures and shares.(Solved)
State the similarities between debentures and shares.
Date posted: April 15, 2021. Answers (1)
- State the advantages of a trust deed.(Solved)
State the advantages of a trust deed.
Date posted: April 15, 2021. Answers (1)
- Outline the contents of a trust deed.(Solved)
Outline the contents of a trust deed.
Date posted: April 15, 2021. Answers (1)
- State the disadvantages of floating charges.(Solved)
State the disadvantages of floating charges.
Date posted: April 15, 2021. Answers (1)
- State the advantages of floating charges.(Solved)
State the advantages of floating charges.
Date posted: April 15, 2021. Answers (1)
- What chapter number of the laws of Kenya is the Cooperatives Societies Act?(Solved)
What chapter number of the laws of Kenya is the Cooperatives Societies Act?
Date posted: April 15, 2021. Answers (1)
- What is the maximum number of persons in a sole trader?(Solved)
What is the maximum number of persons in a sole trader?
Date posted: April 15, 2021. Answers (1)
- What are the two fundamental principles of company law?(Solved)
What are the two fundamental principles of company law?
Date posted: April 15, 2021. Answers (1)
- Dissolution is the final stage of liquidation. After a company's affairs are "wound-up," a liquidator calls a final meeting of the members and/or creditors.Explain how...(Solved)
Dissolution is the final stage of liquidation. After a company's affairs are "wound-up," a liquidator calls a final meeting of the members and/or creditors.Explain how winding up and dissolution takes place.
Date posted: April 15, 2019. Answers (1)
- Explain the applicable methods used in issuing of shares to the public.(Solved)
Explain the applicable methods used in issuing of shares to the public.
Date posted: April 15, 2019. Answers (1)
- Explain the difference between underwriters and brokers.(Solved)
Explain the difference between underwriters and brokers.
Date posted: April 15, 2019. Answers (1)
- Define and explain the functions of promoters.(Solved)
Define and explain the functions of promoters.
Date posted: April 15, 2019. Answers (1)
- State the main features of a prospectus(Solved)
State the main features of a prospectus.
Date posted: April 15, 2019. Answers (1)
- Explain the meaning and importance of articles of association of company.(Solved)
Explain the meaning and importance of articles of association of company.
Date posted: April 15, 2019. Answers (1)
- Explain the meaning and significance of the memorandum of association. (Solved)
Explain the meaning and significance of the memorandum of association.
Date posted: April 15, 2019. Answers (1)
- Explain consequences of registration of a company. (Solved)
Explain consequences of registration of a company.
Date posted: April 15, 2019. Answers (1)
- Explain how a limited company is registered in Kenya(Solved)
Explain how a limited company is registered in Kenya
Date posted: April 15, 2019. Answers (1)