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Summary Company's Finance - Loans £5.99   Add to cart

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Summary Company's Finance - Loans

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A document outlining company's finance, more specifically loans.

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  • June 23, 2023
  • 3
  • 2022/2023
  • Summary
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richard333
Company's Finance - Loans
Loan Capital - Background
Capital acquired from borrowing is known as loan (or debt) capital.

Companies adopting Model Articles have an implied power to borrow but:

Public company cannot borrow until received trading certificate - CA 2006, s761(1).

Limit amount of borrowing directors can engage in, Model Articles may be amended.




Debenture
Document issued by a company acknowledging that they have been indebted to a lender/credit
Lemon v Austin Friars Investment Trust Ltd [1926] Ch 1;
Levy v Abercorris Slate and Slab Co (1887) 37 Ch D 260.

Represents a contract between company (borrower) and lender/creditor (debenture holder).

May be acquired from the company, by transfer or transmission.

Register of debenture holders (lenders/creditors) is kept by the company.


Secured vs. Unsecured
Secured - Loan agreement provides lender with claim over company's assets.

Advantages:

Company defaults on loan - Assets can be sold to satisfy debt owed.

Priority in insolvency - Secured creditors have the right to be paid before unsecured cre

Unsecured - Loan agreement does not provide lender with claim over company's assets.




Secured Lending - Charges
Most common form of corporate security.

Security interest created over an asset(s) by owner (chargor) in favour of a creditor (charge

Agreed that the property will be given over to creditor to pay off debt or some other obli

No transfer of title.

National Provincial Bank v Charnley [1924].

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