Difference between Fixed Charge and Floating Charge
In this article, we will discuss the difference between fixed charge and floating charge under the company law. Let’s begin.
Fixed charge is created on specific assets which may be movable or immovable.
Floating charge is created on the entire class or assets.
It is identifiable with respect to the property & vice-versa.
It is not identifiable with respect to the floating charge.
It is static nature.
It is dynamic nature.
Registration of fixed charge is voluntary.
Registration of floating charge is compulsory.
The fixed charge is created on the existing and determinable property.
The floating charge may be created on existing & determinable property,
And future & indeterminable property.
It is clutches the property on which it is created.
It does not clutch the property on which it is created. It floats over the property.
The company cannot deal with a property, which is subject to a fixed charge.
The company can deal with all the properties, which are subject to a floating charge.
It shall not become a floating charge.
It, upon the occurrence of certain events may become a fixed charge.
Fixed charge shall get priority over the floating charge.
Floating charge shall not get any priority over fixed charge.