# Charges on Company Property — Fixed vs Floating
## What is a Charge?
A charge is an interest or lien created on the property/assets of a company or any of its undertakings as security in favour of a creditor (e.g., for a loan or debenture).
> Sec. 2(16): "Charge" means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage.
## Two Types of Charges
### 1. Fixed Charge
- Created on specific, identified assets (e.g., land & building, plant & machinery).
- The company cannot deal with / sell the charged asset without the consent of the charge-holder.
- Crystallisation is not required — the charge attaches immediately.
- Example: Charge on a specific factory premises (office land and building).
### 2. Floating Charge
- Created on a class of assets, present and future, that keep changing in the ordinary course of business (e.g., stock-in-trade, book debts).
- The company is free to deal with these assets in the ordinary course of business until the charge crystallises.
- Crystallisation = the floating charge becomes a fixed charge — happens on events like winding up, default in payment, or cessation of business.
- Example: Charge on the company's stock of finished goods.
## Comparison Table
| Basis | Fixed Charge | Floating Charge |
|---|---|---|
| Asset covered | Specific, identified asset | Class of assets, changing in nature |
| Dealing with asset | Not permitted without consent | Permitted in ordinary course |
| Crystallisation | Not required | Required to become enforceable as fixed |
| Example | Land & building | Stock-in-trade, debtors |