Professional Documents
Culture Documents
Risk
Management
It is evidenced by:
A deed ,
Certificate of title, or bill of sale needed to
execute a security for a loan.
- The Company
ordinance 1984
- Fixed/Floating Charge;
Fixed charge is created on ascertained property,
of the company prevents dealings and binding the
property in the hands of third parties & would
restrict day to day business of the company.
Charge
-Floating Charge;
An equitable charge on the current assets for the time
being of a going concern
The borrowing company creates a floating charge on its
present and future Assets .namely stocks of unfinished &
finished goods
This allows the company to deal with its assets in the
ordinary way until the charge is crystallized
Document witnessing the creation of Charge on Firms Assets
Form 16 Issued by the Registrar Joint.stock Cos
Hypothecation of stocks/assets
Its a A legal transaction, whereby goods may be made
available as security for a debt without transferring
either the title to the property nor the possession to the
lender-
-Neither the property nor the possession of the goods are
passed to the lender (bank)
-Security is granted by handing over a signed ;
Letter of hypothecation
-If the possession is handed over to the lender,bank
the charge is converted into a pledge
Letter of Hypothecation
The Rights of the creditor: Bank
-The right to inspect the goods under hypothecation
-Can ask the borrower to indemnify the bank against
possible risks to the goods, like fire,
DOCUMENTATION
Lending Operations & Risk
Management