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Types of Charges

Charges can be of two types

(1) Fixed charge – When the charge is generated on certain and specific assets then it is called fixed charge. Such assets are easily identifiable and remain with the organization for a long period. Often such assets may include land, buildings, machines, etc., which are easily identifiable over a long period of time.

The properties on which a fixed charge has been created cannot be traded or transferred by the entity to any other person unless the person holding the charge gives permission.

(2) Floating charge – When a charge is generated not on any specific asset as security for the payment of a loan, but on all or some of the general periodic variable assets of the institution, It is called moving charge. According to Lord Gower, “The movable charge casts a shadow from time to time over all properties of general description like clouds.” According to Lord Macnaughton, “A movable charge is an equitable charge on the movable properties of an institution at a particular point of time. He does not get the same enforced. Such right of his can also be suspended by mutual interference. But if no such arrangement is made, he can exercise his right at any time after a mistake in payment. could.

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