Registering a Charge for Companies

A charge is a form of a security interest that a company puts to a lender or creditor to secure repayment of a loan.

There are fixed and floating charges.

A fixed charge is a charge on secured assets. These may be charges on things like property, machinery, shares.

A floating charge is a charge secured on non-specific assets. These may be charges on things like inventory, cash, stocks or accounts receivable. A floating charge will be converted into a fixed charge if the company forfeits on its ability to repay the loan.

A typical example of a charge will be a mortgage or a financial loan.

When a charge is created, it must be registered with the Accounting and Corporate Regulatory Authority (ACRA). This applies to all Singapore-registered local and foreign companies. A charge must be registered within 30 days. Failure to register a charge is an offence and if convicted, the company officers may be liable for a fine of up to SGD$1,000. Non-compliance may also render the charge void against the creditor.

When the debt has been paid up in whole or in part, the company will need to inform ACRA to release the charge. Upon successful filing, the charge will be removed from the register.

Documents to be maintained when a charge is created:

1. A directors’ resolution to record the loan agreement with the creditor. The directors will also have to be authorised to sign the loan agreement.
2. A copy of the loan agreement must be kept in the company files.
3. Update the register of charges in the company files. The details to be included are the name of the lender, the amount of loan, the terms of the repayment, the type of assets secured, the details of the charge created and the date that the charge was discharged.

To file a charge, the company may engage the services of a registered filing agent.

When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.