6. MEANING, ULTRA VIRES,
MORTGAGE AND CHARGES,
FIXED AND
FLOATING,REGISTRATIONOF
CHARGES, LEGAL PROVISIONS,
EFFECTS AND CONSEQUENCES
OF NON REGISTRATION OF
CHARGES.
DEBENTURES, DEFINITION, KINDS,
GUIDELINES FOR THE ISSUE OF
DEBENTURES, DUTIES OF A
SECRETARY,COMPARE
SARHOLDER/DEBENTURE HOLDER.
12. CONDITIONS TO BORROW FUNDS
EXPRESSED OR IMPLIED
POWER TO BORROW SHOLD BE IMPLIED
POWER TO BORROW
TRADING COMPANIES
RESTRICTED OR REGULATED
SETTING LIMITS UNDER THE
MEMORANDUM OR THE ARTICLES OF
ASSOCIATION.
13. BOARD OF DIRECTORS
POWERS TO BORROW
STATUTORY LIMIT ON THE BORROWING
POWERS OF THE COMPANY
SEC 293 OF COMPANYS ACT PROHIBITS
THE COMPANY TO BORROW ANY FUNDS
IF THE FUNDS BEING BORROWED
ALREADY.
16. COMPANIES AND ULTR VIRES
•
•
•
•
•
Unauthorised borrowing
Ultra vires the company
Beyond the limit of the company`s articles and
memorandum
Director –ultra vires
Beyond the authority of directors specified under
the articles and memorandum.
20. WHAT IS ULTRA VIRES?
An ultra vires act is one beyond the purposes or
powers of a corporation. The earliest legal view
was that such acts were void. Under this
approach a corporation was formed only for
limited purposes and could do only what it was
authorized to do in its corporate charter.
21. REMEDIES TO THE LENDER
Injunction
Not spent by the company
Lender can obtain the order of injunction
Principle
of tracing
Asset bought by that money could be obtained
22. REMEDIES TO THE LENDERS
Subrogation
Company
payment for intra vires
debts
Rank by applying the doctrine of
subrogation
Lender get back the loan like any
other authorised creditor.
23. REMEDIES-RECOVERY
Recovery of damages
Company could borrow from the third party
Mortgages
(immovable properties)
Pledge
Charged with hypothecation
24. TYPES OF MORTGAGES
Simple mortgage
(immovable property, money on due date,
property sold through court order, judicial sale
Mortgage by conditional sale
(have the property conveyed in his name, pays
the entire amount, to the lender, foreclosure,
judicial sale.)
25. EQUITABLE MORTGAGE
Deposit of title deeds
Anomalous mortgage
More than one type of above mortgages
mentioned.
Judicial sale, foreclosure , a suit for obtaining
money, due on a mortgage.
26. CHARGES- CREATION
Loans are advanced to the creditor to the debtor
By the creditor to the debtor
on the security of either movable or immovable
properties
“A
charge is nothing but a right
created by debtor in favour of the
creditor over a movable or
immovable property given as a
security.”
30. FIXED CHARGE
Con some specific asset of the company
Related only to that asset
Land or a building
Prevents the company to deal with out the
consent of the lender
31. FLOATING CHARGE
Equitable charge on some asset
Charge on stock in trade
Book debts
Debentures usually create a floating charge on
the assets of the company.
34. REGISTRATION OF CHARGES
Third party under notice
Registration of same property
Secured feeling of lenders
Charge holders feel that the advance is secured
35. MUST REGISTER
Charge holder must register the following
Issue of debentures
Uncalled capital of the company
Immovable property
Book debts
No pledge on movable property of a company
Floating charge including stock in trade
Calls made but not paid
36. EFFECTS AND CONSEQUENCES OF NON REGN.
Charge becomes void
Unsecured debt
Immediately payable
5000 rs every day for
conscious non
registration
Registration charges
deleted from the
memorandum of
the company
38. WHAT ARE THEY
They are debts
Stock
Bonds
Charge on assets of the company or not
Fixed rate of interest
No voting rights
Secured for the floating charge on the assets of
the company
39. TYPES
Registered
Bearer
Secured and unsecured
Redeemable and non redeemable
Convertible and non convertible
Preferred and ordinary
Equitable
Legal
40. PARI PASSU CLAUSE
Pari passu clause (the secured debentures
discharged though issued at different dates)
No preferences
47. SHARE AND DEBENTURE HOLDERS
Share holders
debenture holders
creditors
Income dividend
interest
All the same rate except the
preference shares
certain
Vote, attend meetings
No voice
Repayment only redeemable
preference shares otherwise no
payback at the time of
liquidation
At the time of redemption
Dividend after payment of
income and taxes
Before arriving at the profits int
charged on the profits
After debenture holders
Priority
55. PERMISSION OF RESERVE BANK
Bearer of the debentures issued
Approval of board of directors
Resolution appointment of underwriters
Approval of the board drafting of propectus
Debentures bond
Trust deed approved by the board
Printing of
Prospectus
Debenture bonds and trust deed.