Businesses may need to raise money in the course of its operations. When a company applies for a loan from a bank or other institutions, it will often give security to the creditor. One common form of security is a charge over assets.
Definition of a Charge
A charge is a form of security interest usually taken by a lender or creditor (“chargee”) to secure repayment of a loan.
Types of Charges
||A charge secured on fixed assets (e.g. land and buildings, a ship, piece of machinery, shares, intellectual property such as copyrights, patents, trade marks, etc.)
A charge secured on non-specific assets or generic categories (e.g. inventory, cash, stocks, accounts receivable).
A floating charge ‘floats’ over the secured assets. It is only converted into a fixed charge if, for example, the company fails to repay the loan.
Registering a New Charge
When a charge is created, it must be registered with ACRA.
The following charges must be registered:
- a charge to secure any issue of debentures
- a charge on uncalled share capital of a company
- a charge on shares of a subsidiary of a company which are owned by the company
- a charge or an assignment created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale
- a charge on land wherever situate or any interest therein
- a charge on book debts of the company
- a floating charge on the undertaking or property of a company
- a charge on calls made but not paid
- a charge on a ship or aircraft or any share in a ship or aircraft
- a 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
The full list of charges and rules governing registration of charges can be found in sections 131 to 141 of Division 8 of the Companies Act.
Who Must Register
Registering a charge applies to all Singapore-registered local and foreign companies.
When to Register
A charge must be registered within 30 days of its creation.
How to Register
Engage the services of a registered filing agent (e.g. law firm, accounting firm or corporate secretarial firm) to submit an online application on the company’s behalf.Company Officers may submit the filing. Alternatively, the company director may submit the filing.
Application will be processed and approved after submission. ACRA will send an email notification confirming the registration of the charge. The email notification will serve as conclusive evidence that the company has complied with the requirements.
Possible Outcomes of Late Registration
Failure to register the charge is an offence. If convicted, company officers may be fined up to S$1,000. Non-compliance may also render the charge void against the liquidator or other secured creditors of the company.
Application for Extension of Time under S137 of the Companies Act
If the company is unable to register the charge within the specified period, the company may request for an extension of time. ACRA only grants extension of time for the following:
- charges created outside Singapore
- charges with typographical errors in the particulars
- charges that were accidentally omitted while registering
- charges that are impartial to the position of creditors or members of the company
Charges in Singapore
Extension of time is not allowed for charge instruments created in Singapore. If the company did not register the charge within 30 days, the company will have to obtain a Court Order, and register the charge within the period granted by the Court.
Charges Outside Singapore
Extension of time is allowed for charge instruments created outside Singapore. If the company did not register the charge within 37 days, the company will have to obtain a Court Order. Once an extension of time is granted, the company is given up to 3 months to register the charge.
Variation of Charge
A variation of charge is an agreement to vary the terms of the original registration (e.g. the amount secured or change in chargee). The transaction must be done through BizFile+ using SingPass or CorpPass. No fee is payable for filing this transaction.
Satisfaction of Charge
When a debt has been paid up in whole or in part, the company needs to inform ACRA via BizFile+ using SingPass or CorpPass to release the charge. Upon successful filing, the charge will be removed from the Register.
Companies may engage a registered filing agent to assist in filing the Satisfaction of Charge with ACRA. There is no filing fee for this transaction.