Green Bank gave a loan of Sh.3,0000,000 to Maendeleo Company Ltd. The bank took a floating charge over all the company’s movable and immovable property. The company has defaulted on repayment of the loan. However, the administrative receiver appointed the bank has noticed that the chattels of the company were not registered and Ujenzi Company which is Maendeleo Company’s creditors are claiming the chattels.
Advise the Official Administrative Receiver of his rights over the chattels
ANSWER
• This problem is based on registration of charges. Under the provisions of the Companies Act, a floating charge is registrable. In this case, the charge was duly registered and a certificate issued.
• Although the chattels were not registered they constitute the security and the administrative receiver is entitled to the same. This is because the registration of the charge cured this defect and the charge is deemed to be valid. As was the case in Ve C. L. Nye Ltd