Charges

An encumbrance means a restriction imposed on the owner's right over his property. All the three words used above impose a restriction on the right of the owner over his own property.

As per Clause 16 of Section 2 of the Companies Act, 2013, charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage.

A charge is called fixed or specific when it is created to cover assets which are ascertained and definite or are capable of being ascertained and defined, at the time of creating the charge whereas a floating charge is not attached to any definite property but covers property of a fluctuating type such as stock in trade.

On the contrary, in case of a fixed or a floating charge the possession of the assets remains with the borrower. The ownership of the property also remains with the borrower. In case of fixed charge he has no right to sell or transfer the asset except with the consent of the charge holder. In case of a floating charge the borrower can treat his floating assets as if they have not been charged. He loses this right only when he commits a default and the charge holder decides to take action for recovery of the money due. In this case we say the floating charge crystallizes.

A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt or performance of an agreement which may give rise to pecuniary liability.

In a pledge the borrower loses possession of the goods pledged as a security for repayment of a debt or performance of an obligation. The pawnor (pledgor) remains the owner of the property. He is entitled to get back the possession on repayment of the debt. However, in all these cases if the borrower commits a default in payment of the principal and interest thereof the lender gets a right to sell the property and recover the amount due to him.

Thus, an encumbrance may be created by a charge, pledge or a mortgage.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 1(c) (Syllabus 2017).

A company does not have implied power of charging its uncalled share capital and may charge its uncalled capital only if its articles or memorandum authorize it to do so. The memorandum may give an express power to charge uncalled capital, or the power may be so wide that it can be inferred by implication. In Newton vs. Debenture-holders of Anglo-Australian Investment Co., the memorandum authorized the company to borrow “upon any security of the company”. It was held that the power was wide enough to include a charge on uncalled capital,

However, a company cannot mortgage or charge any part of its “reserve capital” i.e., such portion (if any) of its uncalled share capital as is incapable of being called up except in the event of winding up of the company.

Thus, Suraj Ltd. can create a charge on uncalled capital if authorized to do so by the articles or memorandum of the Company. The Company cannot create a charge on the Reserve Capital.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 3A(iii) (Old syllabus).

As per Section 77 of the Companies Act, 2013, the particulars of the charge together with a copy of the instrument, if any, creating or modifying the charge shall be filed with the Registrar within a period of 30 days of the date of creation or modification of charge or the extended period up-to 120 days. After amendments in Section 77 of the Companies Act, the provisions restrict the ability of the company to register charge after expiry of 120 days.

Consequences of Non-Registration of Charges

According to Section 77 of the Companies Act, 2013, all types of charges created by a company are to be registered by the ROC, where they are non-compliant and are not filed with the Registrar of Companies for registration, it shall be void as against the liquidator and any other creditor of the company. This does not, however, mean that the charge is altogether void and the debt is not recoverable. So long as the company does not go into liquidation, the charge is good and may be enforced.

Void against the liquidator means that the liquidator on winding up of the company can ignore the charge and can treat the concerned creditor as unsecured creditor. The property will be treated as free of charge i.e. the creditor cannot sell the property to recover its dues.

Void against any creditor of the company means that if any subsequent charge is created on the same property and the earlier charge is not registered, the earlier charge would have no consequence and the latter charge if registered would enjoy priority. In other words, the latter charge holder can have the property sold in order to recover its money.

Thus, non-filing of particulars of a charge does not invalidate the charge against the company as a going concern. It is void only against the liquidator and the creditors at the time of liquidation. The company itself cannot have a cause of action arising out of non- registration [Independent Automatic Sales Ltd. v. Knowles & Foster (1962) 32 Comp Cas].

Conclusion: Accordingly, the refusal of the ROC to register the charge on expiry of 120 days is valid as he is not empowered under the statute to register such delayed charge. Further, considering the consequences of non-registration of charge XYZ Bank Ltd. shall not have priority over the subsequent charge of third-party lender.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4(c) (Syllabus 2022).

Registration of the particulars of the charge created:

According to section 77 of the Companies Act, 2013, it shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise and situated in or outside India, to register the particulars of the charge. Thus, charge may be created within India or outside India. Also, the subject-matter of the charge i.e. the property or assets or any of the company’s undertakings, may be situated within India or outside India.

In the given question, the company has obtained a loan by creating a charge on the assets of the foreign establishment. As per the above provisions, it is the duty of the company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise and whether situated in or outside India, to register the particulars of the charge. Hence, the stand taken by Rockstar Limited not to register the particulars of charge created on the assets located outside India is not correct.

Timeline: The particulars of the charge together with a copy of the instrument, if any, creating or modifying the charge shall be filed with the Registrar within a period of 30 days of the date of creation or modification of charge.

Effect of non-registration of Charges:

According to Section 77 (3) of the Companies Act, 2013, where the particulars of the charge created are not filed with the Registrar of Companies, such charge created by a company shall not be taken into account by the liquidator appointed under the Companies Act, 2013 or the Insolvency and Bankruptcy Code, 2016, as the case may be, or any other creditor of the company.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 4(c) (Syllabus 2022).

According to Section 77 of the Companies Act, 2013, notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator [appointed under this Act or the Insolvency and Bankruptcy Code, 2016] or any other creditor unless it is duly registered under sub-section (1) and a certificate of registration of such charge is given by the Registrar under sub-section (2).

In the case of ONGC Ltd v. Official Liquidators of Ambica Mills Co Ltd (2006) 132 Comp Cas 606 (Guj), the ONGC had not been able to point out whether the so called charge, on the basis of which it was claiming preference as a secured creditor, was registered or not. It was held that in the light of this failure, ONGC could not be treated as a secured creditor in view of specific provisions of section 125 and the statutory requirement under the said section. This does not, however, mean that the charge is altogether void and the debt is not recoverable. So long as the company does not go into liquidation, the charge is good and may be enforced.

Void against the liquidator means that the liquidator on winding up of the company can ignore the charge and can treat the concerned creditor as unsecured creditor. The property will be treated as free of charge i.e. the creditor cannot sell the property to recover its dues. Void against any creditor of the company means that if any subsequent charge is created on the same property and the earlier charge is not registered, the earlier charge would have no consequence and the latter charge if registered would enjoy priority. In other words, the latter charge holder can have the property sold in order to recover its money.

Thus, non-filing of particulars of a charge does not invalidate the charge against the company as a going concern. It is void only against the liquidator and the creditors at the time of liquidation. The company itself cannot have a cause of action arising out of non-registration. Hence, the statement is not correct.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 2(c) (Syllabus 2017).

In accordance with the provisions of the Companies Act, 2013 as contained in Section 77(1) read with Rule 3 of the Companies (Registration of Charges) Rules, 2014, it shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating or modifying such charge in Form No. CHG-1 (for other than Debenture) or Form No. CHG-9 (For Debentures) as the case may be, and is required to be filed with the Registrar of Companies within a period of 30 days of the date of creation or modification of charge along with the specified fees.

(i)In light of the above mentioned provisions, XYZ Limited can mortgage the office building situated in London (UK).

(ii)In light of the above mentioned provisions, a charge can be created for property situated outside India. The e-form prescribed for the purpose of Registration of the charge is Form No. CHG-1 and it will be filled within the prescribed period.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 2(b) (Syllabus 2017).

It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation.

Section 77 of the Companies Act, 2013 dealing with the registration of charge clarifies that any charge created within or outside India needs to be registered. In the given case, charge created by Overseas Ltd should have been registered even if it was on the assets in Bhutan. This clarifies that the stance taken by the officers was completely wrong.

The Company Secretary must work for the registration of the charge which has been provided in the Section 77.

Where charge is created before commencement of the Companies (Amendment) Ordinance, 2019:

•Within a period of 300 days from the date of such creation, without additional fees;

•If not made within the period of 300 days, the charge shall be made within 6 months from the date of commencement of Companies (Amendment) Act, 2019 on payment of additional fees.

Charge has been created after the commencement of the Companies (Amendment) Act, 2019 i.e. on or after 02.11.2018.

•within a period of sixty days of such creation, on payment of such additional fees as may be prescribed:

Provided further that if the registration is not made within the period specified the Registrar may, on an application, allow such registration to be made within a further period of sixty days after payment of such advalorem fees as may be prescribed. Assuming, the charge in the question is created after the commencement of the Companies (Amendment) Act, 2019. So, 4 months has already passed, thus, Section 77 of Companies Act, 2013 restricts the ability of the company to register charge after expiry of 120 days resulting beyond 120 days the charge cannot be registered. The clause relating to condonation of delay in creation/ modification of charge has been removed from Section 87.

Therefore, if e-form CHG-1 is not filed within the specified period, the company shall not be allowed to file the form thereafter.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 2A(ii) (Old syllabus).

The Companies Act, 2013 does not limit a company to give any property situated in India or outside India. An inference can be drawn from Section 77(1) of the Companies Act, 2013, which permit registration of charges created on a property situated in or outside India.

Section 77(1) of the Companies Act, 2013, provides that it shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating/modifying such charge in Form CHG-1/CHG-9 , as the case may be, and is required to be filed with the Registrar of Companies within a period of 30 days of the date of creation or modification of charge along with the specified fees.

Therefore, ABC Products Ltd. can give the properties situated at Maldives for security of term loan.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(iv) (Syllabus 2017).

According to Section 77 of the Companies Act, 2013, all types of charges created by a company are to be registered with the Registrar of Companies (ROC), Where they are non-compliant and are not filed with the Registrar of Companies for registration, the charge shall be void as against the liquidator and any other creditor of the company. In the case of ONGC Ltd v. Official Liquidators of Ambica Mills Co Ltd (2006), the ONGC had not been able to point out whether the so called charge, on the basis of which it was claiming preference as a secured creditor, was registered or not. It was held that in the light of this failure, ONCG could not be treated as a secured creditor in view of specific provisions of section 125 of Companies Act,1956 and the statutory requirement under the said section. This does not, however, mean that the charge is altogether void and the debt is not recoverable. So long as the company does not go into liquidation, the charge is good and may be enforced.

Void against the liquidator means that the liquidator, on winding up of the company, can ignore the charge for the purpose of ascertaining the priority of payment and can treat the concerned creditor as an unsecured creditor. The property will be treated as free of charge i.e. the creditor cannot sell the property to recover its dues.

Void against any other creditors of the company means that if any subsequent charge is created on the same property and the earlier charge is not registered, the earlier charge would have no consequence and the latter charge if registered would enjoy priority over the earlier charge. In other words, the latter charge holder can have the property sold in order to recover its money.

Thus, non-filing of particulars of a charge as required under Section 77 of the Companies Act, 2013 does not invalidate the charge against the company as a going concern. It is void only against the liquidator and the creditors at the time of liquidation. The company itself cannot have a cause of action arising out of non-registration.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 1(c) (Syllabus 2017).

As per section 77 of the Companies Act, 2013 as amended by the ordinance w.e.f 02.11.2018 in respect of a charge created on or after 02.11.2018, the registration is required to be done 0within a time limit of 30 days from the date of creation of charge, upon payment of normal fee. A further period of 30 days shall be allowed upon payment of additional fee as may be prescribed. However, if the company fails to register within the above 60 days the creation of charge, a further period of 60 days is allowed subject to payment of such ad valorem fee as may be prescribed. Accordingly, the charge created should have been registered by the company with payment of ad valorem fees within 120 days from the date of creation of the charge i.e. 15.02.2019.

Therefore, the company should advised to take immediate steps to ensure registration of charge with the aforesaid time frame.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 4(c) (Old syllabus).

Section 77(1) of Companies Act, 2013 states that it shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner, as may be prescribed, with the Registrar within 30 days of its creation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 6(d) (Old syllabus).

Registration of Modification of Charge

As per section 79 of the Companies Act, 2013: The provisions of section 77 of the Companies Act, 2013, relating to registration of charges shall, so far as may be, apply to –

(a)a company acquiring any property subject to a charge within the meaning of that section;

or

(b)any modification in the terms or conditions or the extent or operation of any charge registered under that section.

The term ‘modification’ includes variation of any of the terms of the agreement including variation of rate of interest, increase / decrease in amount of borrowings, change / swap of security, extension of time for repayment, which may be by mutual agreement or by operation of law. Even if the rights of a charge holder are assigned to a third party, it will be regarded as a modification of charge.

Section 79 of the Companies Act, 2013 read with Rule 3 of the Companies (Registration of Charges) Rules, 2014, makes it clear that the requirement of registering the charge shall also apply to a company acquiring any property subject to charge or any modification in terms and conditions of any charge already registered.

On assignment of loan from Bank A to Bank B, the charge holder is changed. Hence, as per Section 79 of the Companies Act, 2013 read with Rule 3 of the Companies (Registration of Charges) Rules, 2014, NSG Ltd. is advised to file Form-CHG-1 for registration of modification of charge for change in charge holder.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 2(a) (Syllabus 2022).

The term "modification of charge" includes variation of any of the terms of the agreement entered into between lender and borrower. It includes change (i.e., increase or decrease) in amount of borrowing, change in security, extension of time for repayment. It also includes variation in rate of interest taken place due to mutual agreement or by operation of law. Even if the rights of a charge holder are assigned to a third party, it will be regarded as modification. The provisions applicable to the registration of a charge under section 77 shall apply to the modification of a charge.

However, change in interest rate fixed by Reserve Bank India does not amount to modification of charge in terms of the conditions of the charge under section 79 of the Companies Act, 2013. Hence, claim of the lending bank to file documents for modification of charge is not tenable.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2(d) (Syllabus 2017).

Section 82(1) of Companies Act, 2013 read with Rule 8(1) of the Companies (Registration of Charges) Rules, 2014, provides that a company shall give intimation to ROC in Form No. CHG- 4 along with the prescribed fees of the payment or satisfaction in full of any charge registered within a period of thirty days from the date of such payment or satisfaction.

Section 82(2) Companies Act 2013 read with Rule 8(2) further provides that where the Registrar enters a memorandum of satisfaction of charge in full in pursuance of section 82 or 83 of Companies Act 2013, he shall issue a certificate of registration of satisfaction of charge in Form No.CHG-5.

Analysis and Conclusion:

In the present case, the combined registered charge created over both factories has not been fully satisfied, yet the company has filed an intimation seeking satisfaction of charge only with respect to Factory-1. Such filing does not conform to the requirements of Section 82 and the relevant Rules. Consequently, the Registrar of Companies is not empowered to issue a certificate of satisfaction of charge in this situation, as issuance of such certificate is permissible only when the charge is satisfied in full.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 2(a) (Syllabus 2022).

Section 82 of the Companies Act, 2013 read with rule 8 of the Companies (Registration of charges) Rules, 2014:

Satisfaction of Charge is another important aspect relating to debts secured by a charge. In case of a full and complete payment of the secured charge registered with the Registrar, the company or charge-holder shall within a period of 30 days from the date of payment or satisfaction in full of any charge registered under Chapter VI of the Companies Act, 2013, give intimation of the same to the Registrar in Form No. CHG-4 along with the prescribed fees. The Registrar may, on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of 300 days of such payment or satisfaction on payment of such additional fees as may be prescribed.

On receipt of such intimation, the Registrar shall issue a notice to the holder of the charge calling upon him to show cause within such time not exceeding 14 days, as may be specified in such notice, as to why payment or satisfaction in full should not be recorded as intimated to the Registrar. If no cause is shown, by such holder of the charge, the Registrar shall order that a memorandum of satisfaction shall be entered in the register of charges maintained by the registrar under section 81 and shall inform the company, that he has done so. If the cause is shown to the Registrar, he shall record a note to that effect in the register of charges and shall inform the company accordingly.

However, the aforesaid notice shall not be sent, in case intimation to the Registrar is in specified form along with the Letter of the charge holder stating that the amount has been satisfied, which is a mandatory attachment in all cases of Form CHG -4 and is signed by the holder of charge [Proviso to Section 82(2)]

Hence, filing of satisfaction of charge after clearance of entire dues of the bank does not depend on obtaining no due certificate from the bank and in absence of which the Registrar will get it confirmed from the lending bank. Hence, Edge Ltd. should have filed the same within the time limit and the ROC would have obtained the confirmation thereto from the bank. The company may therefore file it with payment of additional fees for delayed filing of satisfaction of charge.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2(c) (Syllabus 2022).

According to Section 82 of the Companies Act, 2013 read with Rule 8 of the Companies (Registration of Charges) Rules, 2014, the company shall give intimation to the Registrar of Companies of the payment or satisfaction in full of any charge within a period of 30 days from the date of such payment or satisfaction in Form No.CHG-4 along with the specified fees.

The Registrar may, on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of 300 days of such payment or satisfaction on payment of such additional fees as prescribed.

On receipt of intimation of satisfaction of charge, the Registrar of Companies shall issue a notice to the holder of the charge calling upon him to show cause within such time not exceeding 14 days, as may be specified in such notice, as to why payment or satisfaction in full should not be recorded as intimated to the Registrar of Companies. If no cause is shown, by such holder of the charge, the Registrar of Companies shall order that a memorandum of satisfaction shall be entered in the register of charges maintained by the Registrar of Companies under Section 81 of the Companies Act, 2013 and shall inform the company. However, if the cause is shown to the Registrar, he shall record a note to that effect in the register of charges and shall inform the company accordingly.

Further, Proviso to Section 82(2) of the Companies Act, 2013 provides that the aforesaid notice shall not be required to be sent, in case intimation to the Registrar of Companies in this regard is in the specified form along with the Letter of the charge holder stating that the amount has been satisfied, which is a mandatory attachment in all cases of CHG-4 and is signed by the holder of charge.

Where the Registrar of Companies enters a memorandum of satisfaction of charge in full, he shall issue a certificate of registration of satisfaction of charge in Form No.CHG- 5.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2(a) (Syllabus 2017).

In accordance with Section 85(1) of the Companies Act, 2013 read with Rule 10(2) of Companies (Registration of Charges) Rules, 2014 the entries in the register of charges maintained by the company shall be made forthwith after the creation, modification or satisfaction of charge, as the case maybe.

Therefore, Sayani — Senior Manager (Accounts) ought to make entry in the Register of Charges maintained by the company in Form No CHG - 7 forthwith after creation of the same on 12th March, 2023.

In accordance with Section 85(1) read with Rule 10(2) of Companies (Registration of Charges) Rules, 2014, the register of charges shall be preserved permanently and the instrument creating a charge or modification thereon shall be preserved for a period of eight years from the date of satisfaction of charge by the company.

Thus, views of Sayani Senior Manager (Accounts) are not in order.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2(c) (Syllabus 2017).

As per rule 3(4) of the Companies (Registration of Charges) Rules, 2014, a copy of every instrument evidencing any creation or modification of charge required to be filed with the Registrar in pursuance of section 77, 78 or 79 of the Companies Act, 2013 shall be verified as follows:

(a)where the instrument or deed relates solely to the property situated outside India, the copy shall be verified by a certificate issued either under the seal, if any, of the company, or under the hand of any Director or Company Secretary of the company or an authorised officer of the charge holder or under the hand of some person other than the company who is interested in the mortgage or charge;

(b)where the instrument or deed relates, whether wholly or partly, to the property situated in India the copy shall be verified by a certificate issued under the hand of any Director or Company Secretary of the company or an authorised officer of the charge holder.

The Board members are advised on the above lines.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 1(e) (Syllabus 2022).

Floating charge crystallizes and the security becomes fixed in the following cases:

a)When the company goes into liquidation;

b)When the company ceases to carry on its business;

c)When the creditors or the debenture holders take steps to enforce their security i.e., by appointing receiver to take possession of the property charged;

d)On the happening of the event specified in the deed.

In the aforesaid circumstances, the floating charge is said to become fixed or to have crystallised. BOD may be advised, accordingly.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2(a) (Syllabus 2017).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(d) (Old syllabus).

The essence of floating charge is that the security remains dormant until it is fixed or crystallizes. The company has a right to carry on its business with the help of assets over which a floating charge has been created till the happening of some event which determines this right. A floating charge crystallises and the security becomes fixed in the following cases:

(a)when the company goes into liquidation;

(b)when the company ceases to carry on its business;

(c)when the creditors or the debenture holders take steps to enforce their security;

(d)on the happening of the event specified in the deed.

In Government Stock Investment Co. Ltd. v/s. Manila Railway Co. Ltd., (1897) A.C. 81, the debentures were secured by a floating charge. Three months' interest became due but the debenture holders took no steps and so the charge did not crystallize but remained floating. The company then made a mortgage of a specific part of its property. Held, the mortgagee had priority. The security for the debentures remained merely a floating security as the debenture holders had taken no steps to enforce their security. Accordingly, floating charge cannot be automatically converted into fixed charge unless the any one or more of the conditions mentioned above are met/ satisfied by the company. Also, the lender of the company needs to take action for crystalizing the property subject to floating charge.

Hence, the assessment of Nirja is not correct.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 1(a) (Old syllabus).

A floating charge attached to the company’s property generally remains dormant till it crystallizes or becomes fixed. The company has a right to carry on its business with the help of assets over which a floating charge has been created till the happening of some event which determines this right. Crystallization is the process by which a floating charge converts into a fixed charge. A floating charge crystallises and the security becomes fixed in the following cases:

(a)when the company goes into liquidation;

(b)when the company ceases to carry on its business;

(c)when the creditors or the debenture holders take steps to enforce their security e.g. by appointing receiver to take possession of the property charged;

(d)on the happening of the event specified in the deed.

In the aforesaid circumstances, the floating charge is said to become fixed or to have been crystallised. Until the charge crystallises or attaches or becomes fixed, the company can deal with the property so charged in any manner it likes. Once crystallized, the security cannot be sold, and the lender may take possession of it.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2(c) (Syllabus 2017).