1. Businesses may need to raise money for a variety of reasons in the course of its operations. This include to grow and expand into new markets, invest in new products or services to generate additional revenue streams or simply to meet unexpected expenses.
2. There are various ways that a business can raise money. It can apply for government backed loans, borrow from the bank or issue new equity to existing or new shareholders. When a company applies for a loan from a bank or other institutions, it is often the case that the bank will require the business to provide security for the loan. One common form of security is for the bank to secure a charge over the assets of the company.
3. A charge is a form of security interest usually taken by a lender or creditor to secure repayment of a loan from the borrower. In this case, the lender or creditor is called the chargee and the borrower is called the chargor. There are two type of charge, that is fixed charge and floating charge
4. A fixed charge is a charge secured on fixed assets of the business. This are usually land and buildings, plant and machinery, office equipment, and intellectual property such as copyrights, patents, trade marks, etc. On the other hand, a floating charge is a charge secured on non-specific assets such as inventory, cash at bank, accounts receivable. It floats over the secured assets and is only converted into a fixed charge if, for example, the company fails to repay the loan.
5. In Singapore, when a charge is created, it must be registered with ACRA and must be registered within 30 days of its creation. The following are some of the example charges that must be registered with ACRA:
- a charge on land wherever situate or any interest therein
- a charge on book debts of the company
- a floating charge on the undertaking or property of a company
6. You can engage the services of a registered filing agent to submit an online application on the company’s behalf and register the charges. Failure to register the charge is an offence. If convicted, company officers may be fined up to S$1,000. Non-compliance may also render the charge void against the liquidator or other secured creditors of the company.
7. When a debt for which the charge was given has been paid in whole or in part, the company needs to file with ACRA a statement of satisfaction of the debt in order to release the charge. Upon successful filing, the charge will be removed from the register.
8. PL Biz Consulting Pte Ltd is an ACRA Registered Filing Agent and Registered Qualified Individual since 2016. Please come and talk to us if you need help for your registration of charge matters. We at PL Biz Consulting Pte Ltd have been helping many entrepreneurs and business owners to register or satisfy charges for their companies since 2007.
