Companies (Floating Charges) (Scotland) Act 1961
| Jurisdiction | UK Non-devolved |
Companies (Floating Charges) (Scotland) Act, 1961
(9 & 10 Eliz. 2) CHAPTER 46
An Act to amend the law of Scotland so as to empower companies to give security by way of floating charges; and for purposes connected therewith.
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:—
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 incurred or to be incurred by it (including any balance arising or which may arise on cash account), to create in favour of the creditor a charge, in this Act referred to as a floating charge, over all or any of the property, heritable and moveable, which may from time to time be comprised in its property and undertaking.
(2) A floating charge created by a company shall not affect any property which ceases prior to the commencement of the winding up of the company to be comprised in, and remains outwith, the company's property and undertaking, but shall on the commencement of the winding up of the company, subject to sections one hundred and six A and three hundred and twenty-two 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 not being excepted property, 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 paragraph (c ) of subsection (1) of section three hundred and twenty-seven 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 to which it relates and any interest due thereon:
Provided that nothing in this subsection shall prejudice the operation of subsection (5) of section three hundred and nineteen 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) In the last foregoing subsection ‘excepted property’ in relation to a floating charge means such property, or property of such descriptions, as may be specified in the instrument creating the floating charge as being excepted from the charge.
2 Creation of floating charges by Scottish companies.
2. 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 of charge as nearly as practicable in the form set forth in the First Schedule to this Act, or of a bond or other written acknowledgement of debt incorporating words to the like effect as the form so set out, and there may be excepted from the charge such property or property of such descriptions as may be specified in that behalf in the instrument, bond or acknowledgement.
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 acknowledgement, references to the bond or, as the case may be, the other written acknowledgement.
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 it is not recorded in the Register of Sasines.
4 Extension of power of court to wind up a company.
(1) Section two hundred and twenty-two and subsection (5) of section three hundred and ninety-nine 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 the foregoing subsection, 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) Where any property of a company being wound up 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.
(2) Where any such property is subject both to a floating charge and to a fixed security not falling under the foregoing subsection the fixed security shall have priority over the floating charge unless—
(a ) the contract or undertaking creating the fixed security was made or granted after the commencement of this Act, and
(b ) the floating charge was registered before the right of the creditor in the fixed security was constituted as a real right, and
(c ) the instrument creating the floating charge prohibited the company from subsequently creating any fixed security having priority over, or ranking equally with, the floating charge.
(3) Where any such property is subject to two or more floating charges, those charges shall rank with one another according to the time of their registration:
Provided that if, in the case of any two or more such charges, the instruments creating them each contain a provision that they shall rank with one another equally, they shall so rank.
(4) For the purposes of this section the registration of any two or more floating charges which have been received by the registrar for registration by the same post delivery shall be deemed to be simultaneous and those charges shall accordingly rank with one another equally.
(5) This section shall be without prejudice to subsection (5) of section three hundred and nineteen of the Act of 1948 (which relates to preferential payments).
6 Registration of charges.
6. For the purpose of securing the publication of floating charges created by companies and other charges so created which ought to be published for the information of persons considering taking security from such companies by way of floating charge, the Act of 1948 shall have effect subject to the amendment set out in the Second Schedule to this Act.
7 Further amendment to Act of 1948.
7. The Act of 1948 shall have effect as if—
‘Provided that the holder of a debenture secured by a floating charge shall not be required to value and deduct the security for the purpose of voting at meetings of creditors of the company.’,
‘‘floating charge’ includes a floating charge within the meaning of the Companies (Floating Charges) (Scotland) Act, 1961.’;
| ‘106A | Registration of charges created by companies registered in Scotland. |
| 106B(1) | Duty of company to register charges created by company (Scotland). |
| 106C | Duty of company to register charges existing on property acquired (Scotland). |
| 106K | Extension of Part IIIA.’ |
8 Interpretation.
(1) In this Act unless the context otherwise requires—
(a ) ‘Act of 1948’ means the Companies Act, 1948 , as amended by any other Act including this Act;
(b ) ‘company’ means a company to which section one of this Act relates;
(c ) ‘fixed security’ in relation to any property of a company means any security, other than a...
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