ACCA Applied Skills · Corporate and Business Law (Global) · Loan capital
Sable Ltd keeps a register of its own charges at its registered office, open to inspection by members and creditors. Separately, it files particulars of a new charge at the public registry. Sable Ltd fails to enter the new charge in its own internal register, but the charge was properly registered at the public registry. What is the effect on the charge's validity?
The charge stays valid because its effectiveness against the liquidator and creditors depends on registration at the public registry. Omitting it from the company's internal register is a breach of the company's duties that may lead to penalties for the company and its officers, but does not void the security.
- AThe charge is void against the liquidator because both registers are required for validity
- BThe charge remains valid, because validity depends on registration at the public registry, though the company and its officers may be liable for the defaultCorrect
- CThe charge is valid only if the chargee inspects the internal register annually
Explanation
Validity against liquidators and creditors turns on registration at the public registry. Failing to keep the internal register up to date is a default that may attract penalties, but does not invalidate the charge.
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