Companies Act 2007 · As enacted · Part XIV · Floating Charges
431. Ranking of floating charges
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
Where any property of a company is subject both to a floating charge and to a fixed security arising by operation of law, the fixed security shall have priority over the floating charge.
Where any property of a company is subject both to a floating charge and to a fixed security granted by the company, the fixed security shall have priority over the floating charge, unless—
the instrument creating the floating charge—
prohibited the granting by the company of that fixed security ; and
had been registered under Part VI of this Act before the date on which the fixed security was granted by the company ; or
the instrument creating the floating charge is expressed to take priority over the fixed security, and the person entitled to the benefit of the fixed security has consented in writing to that priority ; or
before the date on which the fixed security was granted by the company, the floating charge had attached to the property pursuant to section 433
and either—
a receiver had been appointed in respect of the property and the person to whom the fixed security was granted had notice of the appointment of the receiver ; or
the person to whom the fixed security was granted knew or by reason of his relationship with the company ought to have known, that—
(A)
the floating charge had attached to that property ;
(B)
the grant of the fixed security was a breach of the instrument creating the floating charge ; or
(C)
the grant of the fixed security did not occur in the normal course of the company’s business.
Where any property of a company is subject to more than one floating charge, those floating charges shall rank among themselves according to the date of registration under
Part VI, subject to any provision to the contrary in an instrument creating a floating charge which has been consented to in writing by the person entitled to the benefit of the floating charge, the priority of which is postponed by that provision.
For the avoidance of doubt and subject to the terms of the instrument under which it is created, the priority of a floating charge shall not be affected by the fact that all or any part of the debts or obligations secured by that floating charge, were incurred or arose after —
the creation and registration by the company of a subsequent floating charge ; or
the grant by the company of any fixed security in respect of the whole or any part of the property comprised in the floating charge.
A person shall be deemed to have received notice of the appointment of a receiver for the purposes of subsection (2), if—
the person knows or ought by reason of his relationship with the company to know that a receiver has been appointed ; or
public notice of the appointment of the receiver has been given in accordance with paragraph (b) of subsection (1) of section 440.
Without limiting the provisions contained in subsection (3) of section 427, where land owned by a company is subject to a floating charge and to a fixed security which has been registered under the Registration of Documents
Ordinance (Cap. 117), the fixed charge shall have priority over the floating charge, unless the floating charge was registered in repsect of that land under the Registration of
Documents Ordinance (Cap. 117) prior to the registration of the fixed security.
Part XV
Receivers and Managers
Part XVI
Registrar-General of Companies and Registration Appointment of Officers
Part XVII
Application of Act to Existing Companies
Part XVIII
Overseas Companies
Part XIX
Advisory Commission
Part XX
Companies Disputes Board
Part XXI
Offences Miscellaneous Offences
Part XXII
Miscellaneous Prohibition of Partnership with More Than Twenty Members
Part XXIII