SGS 8 - Security

Question 1

What case defined what is required for a fixed charge?

Answer 1

• National Westminster v Spectrum
  
  • Control
  • For book debts - closed account
  • Can only be released with the active concurrence of the lender

Question 2

What does Para 14 SchB1 IA 1986 state?

Answer 2

• Holder of a qualifying charge can appoint an administrator
• Must state para 14 applies
• Must state empowered to appoint an administrator
• Must state what qualifies as a floating charge

Question 3

What are the 5 ways of taking a charge over property?

Answer 3

• Fixed
• Floating
• Mortgage
• CBWOLM
• Assignment

Question 4

What are the requirements for a legal assignment?

Answer 4

s136 LPA 1925:

• In writing
• Absolute assignment
• Signed by assignor
• Notification given to counterparty

Question 5

What are the advantages/disadvantages of a legal mortgage over shares?

Answer 5

AD:
 - Control
 - Dividend
 - Easier to affect sale of company as a going concern
DIS:
 - Administrative burden
 - Liability as associate
 - Liable for value of unpaid shares
 - Risk of being classed as a subsidiary (CA) or associate (IA)

Question 6

Equitable mortgage

Answer 6

AD:
 - No administrative burden
 - CAn still affect sale of company as a going concern
DIS:
 - No dividends
 - Low ranking

Question 7

What are the 2 main types of insurance which a bank will take security over?

Answer 7

• Keyman insurance

- Buildings insurance

Question 8

What assets will not appear on a balance sheet but the bank will want security over?

Answer 8

• Future property
• Insurance policies
• Future IP
• Key contracts
• CUrrent IP
• Software/domain names
• Goodwill
• Everything

Question 9

How must a charge be registered at Companies House?

Answer 9

• S859A CA 2006:
• Within 21 days of creation
• MR01
• Certified copy
• Fee

Question 10

How must an interest in land be registered?

Answer 10

• Registered on charges register of land

- Priority is dated from REGISTRATION

Question 11

How must an interest in unregistered land be registered?

Answer 11

Registration of CBWOLM triggers first registration.

Charge registered on charges register

Question 12

How must an interest a legal mortgage over shares be perfected?

Answer 12

• Transfer shares into lenders name

- Issue new share certificate

Question 13

How must an equitable mortgage be perfected?

Answer 13

• Share certificate deposited with lender
• Share certificate is executed but undated
• Blank stock transfer form
• Power of attorney
• *Shares transferred into lenders name when charge enforced

Question 14

How is legal assignment perfected?

Answer 14

S136 LPA complied with

Counterparty notified

Question 15

How is a fixed charge perfected?

Answer 15

• Normal CH registration

- Notification to any party

Question 16

How is IP perfected?

Answer 16

registered at IP office

Question 17

How is it best to hold insurance?

Answer 17

1 Co-insured
2 Noted
3 Jointly insured

Question 18

What legislation provides that certain security does not need to be registered? What security does not technically require registration?

Answer 18

• Financial Collateral Arrangements (no.2) Regulations 2003

- Shares