Companies (Floating Charges and Receivers) (Scotland) Act 1972
| Jurisdiction | UK Non-devolved |
| Citation | 1972 c. 67 |
| Year | 1972 |
Companies (FloatingCharges and Receivers)(Scotland) Act 1972
1972 CHAPTER 67
An Act to re-enact with modifications the law of Scotland in relation to floating charges; to make provision for the appointment and functioning of receivers in respect of incorporated companies which the Court of Session has jurisdiction to wind up; to confer on receivers or managers of the property and undertaking of a company incorporated in England certain powers over the property of that company in Scotland; and for purposes connected therewith.
[17th October 1972]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I
Floating Charges
1 Power of incorporated companies to create floating charges.
(1) It shall be competent under the law of Scotland for an incorporated company (whether a company within the meaning of the Act of 1948 or not), for the purpose of securing any debt or other obligation (including a cautionary obligation) incurred or to be incurred by, or binding upon, the company or any other person, to create in favour of the creditor in the debt or obligation a charge, in this Act referred to as a floating charge, over all or any part of the property (including uncalled capital) which may from time to time be comprised in its property and undertaking.
(2) A floating charge created by a company shall, on the commencement of the winding up of the company, subject to sections 106A and 322 of the Act of 1948 (which relate among other things to the validity of floating charges), attach to the property then comprised in the company's property and undertaking or, as the case may be, in part of that property and undertaking, but subject to the rights of any person who—
(a ) has effectually executed diligence on the property or any part of it; or
(b ) holds a fixed security over the property or any part of it ranking in priority to the floating charge; or
(c ) holds over the property or any part of it another floating charge so ranking;
and, subject as aforesaid, the provisions of the Act of 1948 relating to winding up, except section 327(1)(c ) thereof, shall have effect as if the charge were a fixed security over the property to which it has attached in respect of the principal of the debt or obligation to which it relates and any interest due to or to become due thereon:
Provided that nothing in this subsection shall prejudice the operation of section 319(5) of the Act of 1948 (which provides among other things for the payment of certain debts in certain circumstances out of property comprised in or subject to a floating charge).
(3) Nothing in this section shall derogate from the provisions of sections 13(7) and 14(7) of this Act (attachment of floating charge on appointment of receiver).
(4) For the avoidance of doubt, it is hereby declared that, subject to section 322 of the Act of 1948, interest shall, in respect of a floating charge which after the commencement of this Act attaches to the property of the company, accrue until payment of the sum due under the charge is made.
2 Creation of floating charges by Scottish companies.
(1) A floating charge may be created, in the case of a company which the Court of Session has jurisdiction to wind up, only by the execution, under the seal of the company, of an instrument or bond or other written acknowledgment of debt or obligation which purports to create such a charge.
(2) Execution in accordance with this section includes execution by an attorney authorised for such purpose by the company by writing under its common seal; and any such execution on behalf of the company shall bind the company.
References in this Act to the instrument by which a floating charge was created are, in the case of a floating charge created by words in a bond or other written acknowledgment, references to the bond or, as the case may be, the other written acknowledgment.
3 Effect of floating charges in relation to heritable property in Scotland.
3. For the avoidance of doubt, it is hereby declared that a floating charge shall, subject to the Act of 1948, have effect in accordance with this Act in relation to any heritable property in Scotland to which it relates, notwithstanding that the instrument creating it is not recorded in the Register of Sasines.
4 Extension of power of court to wind up a company.
(1) Sections 222 and 399(5) of the Act of 1948 (which specify the circumstances in which certain companies may be wound up by the court) shall, in relation to a company which the Court of Session has jurisdiction to wind up, have effect as if they included the following circumstances, that is to say, if there is subsisting a floating charge over property comprised in the company's property and undertaking, and the court is satisfied that the security of the creditor entitled to the benefit of the floating charge is in jeopardy.
(2) The security of a creditor shall, for the purposes of subsection (1) of this section, be deemed to be in jeopardy if the court is satisfied that events have occurred or are about to occur which render it unreasonable in the interests of the creditor that the company should retain power to dispose of the property which is subject to the floating charge.
5 Ranking of floating charges.
(1) Subject to subsection (2) of this section, the instrument creating a floating charge over all or any part of the company's property under section 2 of this Act or any instrument of alteration under section 7 of this Act may contain—
(a ) provisions prohibiting or restricting the creation of any fixed security or any other floating charge having priority over, or ranking pari passu with, the floating charge; or
(b ) provisions regulating the order in which the floating charge shall rank with any other subsisting or future floating charges or fixed securities over that property or any part of it.
(2) Where all or any part of the property of a company is subject both to a floating charge and to a fixed security arising by operation of law, the fixed security shall have priority over the floating charge.
(3) Where the order of ranking of the floating charge with any other subsisting or future floating charges or fixed securities over all or any part of the company's property is not regulated by provisions contained in the instrument creating the floating charge or in any instrument of alteration, the order of ranking shall be determined in accordance with the following provisions of this section.
(4) Subject to the provisions of this section—
(a ) a fixed security, the right to which has been constituted as a real right before a floating charge has attached to all or any part of the property of the company, shall have priority of ranking over the floating charge;
(b ) floating charges shall rank with one another according to the time of registration in accordance with Part IIIA of the Act of 1948;
(c ) floating charges which have been received by the registrar for registration by the same postal delivery shall rank with one another equally.
(5) Where the holder of a floating charge over all or any part of the company's property which has been registered in accordance with Part IIIA of the Act of 1948 has received intimation in writing of the subsequent registration in accordance with that Part of that Act of another floating charge over the same property or any part thereof, the preference in ranking of the first-mentioned floating charge shall be restricted to security for—
(a ) the holder's present advances;
(b ) future advances which he may be required to make under the instrument creating the floating charge or under any ancillary document;
(c ) interest due or to become due on all such advances; and
(d ) any expenses or outlays which may reasonably be incurred by the holder.
(6) This section shall be without prejudice to section 319(5) of the Act of 1948 (preferential payments).
6 Registration of charges.
6.—For the purpose of securing the registration in Scotland of charges created by companies, the provisions set out in the Schedule to this Act as Part IIIA of the Act of 1948 shall have effect in substitution for Part IIIA of that Act as set out in Schedule 2 to the Companies (Floating Charges) (Scotland) Act 1961.
7 Alteration of floating charges.
(1) The instrument creating a floating charge under section 2 of this Act or any ancillary document may be altered by the execution of an instrument of alteration by the company, the holder of the charge and the holder of any other charge (including a fixed security) which would be adversely affected by the alteration.
(2) Such an instrument of alteration shall be validly executed if it is executed—
(a ) in the case of a company, under its common seal or by an attorney authorised for such purpose by the company by a writing under its common seal;
(b ) where trustees for debenture-holders are acting under and in accordance with a trust deed, by those trustees;
(c ) where, in the case of a series of secured debentures, no such trustees are acting, by or on behalf of—
(i) a majority in nominal value of those present or represented by proxy and voting at a meeting or debenture-holders at which the holders of at least one-third in nominal value of the outstanding debentures of the series are present or so represented; or
(ii) where no such meeting is held, the holders of at least one-half in nominal value of the outstanding...
To continue reading
Request your trial