Registration of charges
Section 108(1) of the Act states that where a charge to which this section applies is created by a company, the charge shall be lodged with the Registrar for registration within thirty days after the creation of the charge a statement of the prescribed particulars. .If this section is not complied with in relation to the charge, the charge shall, so far as any security on the company’s property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company.
(2) Nothing in subsection (1) shall prejudice any contract or obligation for repayment of the money secured by a charge and when a charge becomes void under this section, the money secured thereby shall immediately become payable.
(3) The charges to which this section applies are –
(a) a charge to secure any issue of debentures;
(b) a charge on uncalled share capital of a company,
(c) a charge on shares of a subsidiary of the company which are owned by the company;
(d) a charge or an assignment created or evidenced by an instrument which if executed by an individual within West Malaysia and affecting property within West Malaysia would be invalid or of limited effect if not filed or registered under the Bills of Sale Act, 1950 [Act 268];
(e) a charge on land wherever situate or any interest therein;
(f ) a charge on book debts of the company;
(g) a floating charge on the undertaking or property of a company;
(h) a charge on calls made but not paid;
(i) a charge on a ship or aircraft or any share in a ship or aircraft;
(j) charge on goodwill, on a patent or licence under a patent, on a trade mark,
or on a copyright or a licence under a copyright; and
(k) a charge on the credit balance of the company in any deposit account.
(4) Where a charge created in Malaysia affects property outside Malaysia, the statement of the prescribed particulars may be lodged for registration under and in accordance with subsection (1) notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the place in which the property is situate.
(5) When a series of debentures containing or giving by reference to any other instrument any charge to the benefit of which the debenture holders of that series are entitled equally is created by a company, it shall be sufficient if there are lodged with the Registrar for registration within thirty days after the execution of the instrument containing the charge, or if there is no such instrument after the execution of the first debenture of the series, a statement containing the following particulars:
(a) the total amount secured by the whole series;
(b) the dates of the resolutions authorizing the issue of the series and the date
of the covering instrument , if any, by which the security is created or defined;
(c) a general description of the property charged; and
(d) the names of the trustee, if any, for the debenture holders.
(6) For the purposes of subsection (5) where more than one issue is made of debentures in the series there shall be lodged within thirty days after each issue particulars of the date and amount of each issue, but an omission so to do shall not affect the validity of the debentures issued.
(7) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his whether absolutely or conditionally subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any debentures, the particulars required to be lodged under this section shall include particulars as to the amount or rate per centum of the commission, allowance or discount so paid or made, but omission so to do shall not affect the validity of the debentures issued.
(8) The deposit of any debentures as security for any debt of the company shall not for the purposes of subsection (7) be treated as the issue of the debentures at a discount.
(9) No charge or assignment to which this section applies (except a charge or assignment relating to land) need be filed or registered under any other written law.
(10) Where a charge requiring registration under this section is created before the lapse of thirty days after the creation of a prior unregistered charge, and comprises all or any part of the property comprised in the prior charge, and the subsequent charge is given as a security for the same debt as is secured by the prior charge, or any part of that debt, then to the extent to which the subsequent charge is a security for the same debt or part thereof, and so far as respects the property comprised in the prior charge, the subsequent charge shall not be operative or have any validity unless it is proved to the satisfaction of the court that it was given in good faith for the purpose of correcting some material error in the prior charge or under other proper circumstances and not for the purposes of avoiding or evading the provisions of this Division (Division 7of the Act – Registration of Charges).
| Activity 3.9
|Question to activity 3.9||Suggested answers to activity 3.9|