ExpertMedium2 marksMultiple Choice
ACCA · Question 20 · Corporate and Business Law
What event causes a floating charge to 'crystallise'?
What event causes a floating charge to 'crystallise'?
Answer options:
A.
The company purchases new inventory.
B.
The company goes into liquidation or a receiver is appointed.
C.
The company pays a dividend to its shareholders.
D.
The charge is registered at Companies House.
How to approach this question
Identify the trigger events that convert a floating charge to a fixed charge.
Full Answer
B.The company goes into liquidation or a receiver is appointed.✓ Correct
A floating charge 'hovers' over a class of assets, allowing the company to deal with them in the ordinary course of business. It crystallises (attaches to the specific assets held at that time) upon certain events, such as liquidation, receivership, or cessation of business.
Common mistakes
Confusing the creation/registration of the charge with its crystallisation.
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