14. Debenturers(1).pptx - COMPANY LAW BAB 2202/LAW 2034...

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COMPANY LAW BAB 2202/LAW 2034 DEBENTURES
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Debentures SUNWAY UNIVERSITY
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Debentures Debentures are documents given as acknowledgement of indebtedness. The most common form of debentures are those issued by corporation acknowledging a long-term loan to the corporation. A debenture may take the form of a promissory note. See s4(1) CA 1965 and CMSA 2007 which adopted the CA definition and included some other factors. See also s 38 CA 1965 SUNWAY UNIVERSITY
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Debentures SUNWAY UNIVERSITY
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Debentures Debentures are loans that are usually secured and are said to have either fixed or floating charges with them. Under a fixed charge, the debtor is restricted from managing and disposing of the charged assets freely. A debenture with a fixed charge has a fixed rate of interest and might be presented as: '10% Debenture 2005/2008 RM1,000,000' SUNWAY UNIVERSITY
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Debentures A debenture issued with a floating charge means that the interest rate is not fixed and such debentures are usually not tied to any specific asset such as land or buildings. However, under a floating charge, the debtor is permitted to manage and dispose of the charged assets in the ordinary course of his business without the consent of the charge holder until the ‘crystallisation’ of the charge. When the charge ‘crystallises’ (i.e. when some event occurs such as default by, or insolvency of, the chargor), the creditor may terminate the chargor’s permission to deal with the charged assets and assert his security rights over them. SUNWAY UNIVERSITY
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Debentures The distinction between a fixed charge and a floating charge was affirmed by Lord Millett in Agnew v. Commissioners of Inland Revenue (Re Brumark Investment Ltd) [2001] 3 WLR 454 .
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