新加坡公司法-英文版

CHAPTER 16      SINGAPORE COMPANY LAW

Section 1          Introduction

Section 2          Incorporation and its Consequences

Section 3          Corporate Governance

Section 4          Enforcement of Corporate Rights 

Section 5          Shareholder Remedies 

Section 6          Shares 

Section 7          Debentures and Charges 

Section 8          Companies in Distress 

Section 9          Winding up 

SECTION 1     INTRODUCTION

16.1.1     InSingapore, companies are principally governed by the Companies Act (Cap 50, 1994 Rev Ed) (hereinafter “the Act”). It should be noted though that specific types of companies may, in addition to the Companies Act, be regulated by other statutes. For example, insurance companies and banks are also regulated by the Insurance Act (Cap 142, 1994 Rev Ed) and the Banking Act (Cap 20, 1994 Rev Ed) respectively. Limited liability partnerships, which despite their name are companies, are governed by the Limited Liability Partnership Act (Act 5 of 2005). Certain provisions in other statutes such as the Securities and Futures Act (Cap 289, 1994 Rev Ed) are also relevant to companies. 

16.1.2     It should also be noted that the statutory provisions governing companies are supplemented by the common law. 

SECTION 2     INCORPORATION AND ITS CONSEQUENCES

Obligation to Incorporate

16.2.1     Under section 17(3) of the Act, a business organization that has more than 20 members must be incorporated as a company. However, this requirement does not apply to a partnership of persons carrying on a profession that is formed in pursuance of some other written law inSingapore(section 17(3) of the Act). Thus members of the legal profession who are governed by the Legal Profession Act (Cap 161, 1994 Rev Ed) may establish partnerships of more than 20 partners.

Registration of a Company

16.2.2     As a general rule, any person may, upon lodgment of the requisite documents and payment of the prescribed fee, register a company in Singapore. The mandatory documents to be lodged under section 19(1) of the Act are the memorandum and articles of association. The memorandum and articles of association are the constitutional documents of the company. Under section 22(1) of the Act, the memorandum of association must prescribe the name of the company, the amount of its share capital (if any) and whether the liability of the members of the company is limited or unlimited. The articles of association are the regulations of the company and contain provisions relating to how the company is to be governed. Where the memorandum and the articles are in conflict, the former will prevail. 

16.2.3     Once the memorandum of the company is registered, the Registrar will issue a notice of incorporation stating that the company is, from the date specified in the notice, incorporated and the type of company it is, i.e. whether it is a limited or unlimited company and where applicable that it is a private company – see section 19(4) of the Act.

 Effects of Incorporation

16.2.4     Section 19(5) of the Act sets out the general effect of incorporation which is that the company is a body corporate with all such powers as flow from such an entity. The company may sue and be sued in its own name, it has perpetual succession in that it can survive indefinitely until it is wound up, it may hold land, and the liability of its members is limited in the event the company is wound up.

16.2.5     Cases have established that as a body corporate a company has a distinct personality that is recognized by law. In other words, a company has an existence and identity separate from that of its members – see Salomon v A Salomon & Co Ltd [1897] AC 22; Lee v Lee’s Air Farming Ltd [1961] AC 12. The most important consequence of this is that the debts and obligations incurred by the company are its own and its members do not share the company’s liabilities. Creditors of the company may only look to the company for payment of debts owed to them by the company. If the company is insolvent and cannot pay its debts, the creditors will have to bear the loss however solvent the company’s individual members may be. All that the members of a company are obliged to do is to contribute the amount that remains unpaid on the shares that the members have subscribed. This obligation is owed to the company, not the creditors of the company. As such, if the shares were issued on a fully paid basis, or have already been fully paid, the members have no further liability to the company. Thus, when speaking of limited liability it is important to note that what is meant is not that the company’s liability is limited but that the members’ liability to contribute to the company is limited to the share capital for which the members have agreed to subscribe. 

‘Lifting the Veil’ of Incorporation 

16.2.6      While an incorporated company has a personality separate from that of its members, there are circumstances when the courts will ignore such separate personality and treat the company and its members (or officers) as one for limited purposes. Thus, for example, there may be circumstances when the courts will hold the members of a company liable for debts incurred by the company. When the courts do so, it is said that the veil of incorporation is lifted or pierced. Generally, the cases of veil lifting fall into two categories: by statute and at common law. 

Statutory Exceptions to the Separate Personality Doctrine 

16.2.7     It is open to Parliament to limit the effects of incorporation by a suitably worded statutory provision. One of the more important statutory limitations on the separate personality doctrine arises under sections 339(3) and 340(2) of the Act. The combined effect of those provisions is that, where debts are contracted without any reasonable or probable expectation that the company would be able to pay the debts, any officer of the company who was a party to the contracting of such debts is guilty of an offence and may, after conviction, be made personally liable by the court for the payment of the whole or any part of such debts. 

16.2.8     Another important exception is found in section 340(1) of the Act. Where it appears in the course of the winding up of a company that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the court may declare that any person who was knowingly a party to the carrying on of the business in such a manner shall be personally liable for all or any of the debts or liabilities of the company as the court may direct.

16.2.9     A third important exception arises where dividends are paid even though there are no available profits out of which to pay such dividends – see section 403(2)(b) of the Act. Since dividends may only be paid where there are profits so as not to unduly prejudice creditors of the company, a director or manager of a company who wilfully pays or permits the payment of a dividend in the absence of profits will be liable to the creditors of the company for the amount of the debts due to them to the extent by which the dividends exceed the available profits.

 Common Law Exceptions to the Separate Personality Doctrine

16.2.10    Persons incorporate companies for various reasons but, undoubtedly, one of the reasons is to insulate themselves from personal liability should the business fail. Accordingly, the mere fact that members or officers of a company utilize the corporate vehicle to shield themselves from personal liability is no -reason to disregard the company’s separate personality – see Adams v Cape Industries plc [1990] 1 Ch 433. However, the position is different where the members or officers of a company abuse the corporate form for improper means.

16.2.11    Thus, if an individual already has existing legal obligations, but attempts to use the corporate vehicle to evade such obligations, the courts will ignore the company’s separate personality. For example, it has been held that a person who has agreed to sell a house cannot avoid his contractual obligations by transferring the house to a company. Both he and the company were ordered to specifically perform the contract even though the company was not a party to the contract – see Jones v Lipman [1962] 1 WLR 832. 

16.2.12    Similarly, if a company is used to perpetrate a fraudulent act, the courts will treat the company and those behind it as one and the same. Thus, if a company has been incorporated to defraud innocent investors, the court may hold the promoter of the company liable even though the promoter and company are separate persons – see Re Darby [1911] 1 KB 95.

SECTION 3     CORPORATE GOVERNANCE 

Separation of Ownership and Managemen     t

16.3.1     Section 157A of the Act states that the business of the company shall be managed by or under the direction of the directors. The directors may exercise all the powers of a company except any power that the Act or the memorandum and articles of the company require the company to exercise in general meeting. This reflects one of the features of company law, namely, that it can facilitate a separation of ownership and management. The members or shareholders who own the company need not necessarily be involved in its management as directors. While in some companies, particularly small ones, the members of the company may also be involved in its management - either as directors or in some other executive capacity - in many other companies, the members are not involved in management. Instead, such companies are managed by boards of directors in which many of the directors are not members of the company. Even when the directors are members of the company, their shareholdings in the company may be relatively small. It should also be noted that, in such companies, even this management by the board may often be notional as the majority of the members of the board may not be full-time directors but are non-executive directors. In such companies, the day-to-day management of the company will be in the hands of the senior executive officers of the company, some of whom may be board members. The role of boards in such companies is then to exercise a general oversight but not to be involved in executive matters. 

Statutory Duties 

16.3.2     Under common law, directors are regarded as fiduciaries and therefore owe fiduciary duties to their companies. At the same time, the Act also prescribes certain duties on directors which mirror their general duties under the common law. One important provision is section 157(1) of the Act which prescribes that a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office. Section 157(2) of the Act goes on to state that an officer or agent of a company shall not make improper use of any information acquired by virtue of his position as an officer or agent of the company to gain, directly or indirectly, an advantage for himself or for any other person, or to cause detriment to the company. 16.3.3     Section 157 of the Act does not purport to be an exhaustive statement of the law relating to the duties that directors owe to their companies. In this regard, section 157(4) provides that the section is in addition to and not in derogation, of any other rule of law relating to the duty or liability of directors or officers of a company. The effect of section 157 is to render those duties mandatory while the duties at common law are capable of exclusion by agreement between the company and its directors, assuming that the company has made such a decision independently of the interested directors. Under section 157(3) of the Act, a breach of sections 157(1) and 157(2) renders the officer or agent liable to the company for any profit made or any damage suffered by the company as a result of the breach. At the same time, a breach of these sections is an offence, and the officer or agent shall be liable upon conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding one year. 

Duty at Common Law to Act in the Best Interests of the Company

16.3.4     In the exercise of their duties, directors must act bona fide in what they consider is in the best interests of the company. When the acts of directors are challenged, the courts do not substitute their own judgment for that of the directors – see ECRC Land Pte Ltd v Wing On Ho Christopher [2004] 1 SLR 105; Vita Health Laboratories Pte Ltd v Pang Seng Meng [2004] 4 SLR 162. All that the courts are concerned about is whether the directors have acted honestly in what they (and not the courts) considered to be in the company’s best interests. Of course, if the decision is one that no reasonable board would have arrived at, this casts serious doubt on the bona fides of the directors.

16.3.5     It should be noted though that, while the directors’ overriding duty is to the company, section 159 of the Act provides that in exercising their powers, directors are entitled to have regard to the interests of the company’s employees generally, as well as the interests of its members. That directors may have regard to the interests of its members is also the position at common law since the members collectively do in a sense comprise the company notwithstanding the company’s separate personality – see Peters American Delicacy Co Ltd v Heath (1939) 61 CLR 457; Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286. The entitlement to have regard to the interests of employees is also a sensible one since advancing the interests of employees will often be in the best interests of the company. 

16.3.6     There are also circumstances where directors must have regard to the interests of creditors. Generally speaking, creditors have no interest in the company’s assets. A creditor who wishes to enforce the debt owing to him from the company must bring a claim against the company. In the absence of an interest in the company’s assets, the directors of a company do not have to take the interests of creditors into account when making corporate decisions. However, when a company is unable to pay its debts, and is thereby effectively insolvent, the interests of its creditors must be taken into account. This is because creditors of an insolvent company are entitled to appoint a liquidator to get in the assets of the company to which the creditors have a prior claim before the members of the company. Accordingly, in such circumstances, directors must ensure that the affairs of the company are properly administered and that its property is not dissipated or exploited to the prejudice of the creditors – see Winkworth v Edward Baron Development Co Ltd [1987] 1 All ER 114. 

Duty at Common Law to Avoid Conflicts of Interest 

16.3.7     As a fiduciary, a duty of loyalty is imposed on a director vis-à-vis the company. As a result, a director is obliged not to place himself in a position where his duty to the company may conflict with his own interests – see Chew Kong Huat v Ricwil (Singapore) Pte Ltd [2000] 1 SLR 385; Kumagai-Zenecon Construction Pte Ltd v Low Hua Kin [2000] 2 SLR 501. One particular application of this duty is that a director is not permitted, without the fully informed consent of the company, to make a profit in connection with the director’s position. Thus, if the director comes across a business opportunity while discharging his role as a director, he cannot personally take advantage of such an opportunity unless the company has, with full knowledge of the facts, permitted him to do so. This permission may be given by the rest of the board (assuming the other board members giving approval do not stand to benefit personally) or by the members in general meeting. 

Duty at Common Law to Act for Proper Purposes 

16.3.8     The management of a company is generally vested in the board of directors and the board will often have other more specific powers such as the power to issue shares under section 161 of the Act, provided that the directors have obtained a specific or general mandate to do so. Such powers must be exercised for proper purposes. Even if directors have acted in good faith in what they believe is in the best interests of the company, they may have exercised certain powers in an improper manner. For example, it has been held that, where the power to issue shares was used to facilitate a takeover bid for a company, that was not a proper exercise of such a power even though the directors felt that they were acting in the company’s best interests – see Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821.

 Effect of Breach of Fiduciary Duties 

16.3.9     If a director places his own interests above those of the company, the director will be liable for any loss caused to the company. If the director has profited from his position without the informed consent of the company, the director may have to account for the profits to the company. Where the director has contracted with the company, e.g. the director has sold an asset to the company, the company may be able to avoid the contract if the contract with the company was entered into in breach of the director’s fiduciary obligations to the company. Where a third party has entered into a contract with the company knowing that the directors of the company have acted improperly, the company may also be able to avoid the contract vis-à-vis the third party. 

SECTION 4     ENFORCEMENT OF CORPORATE RIGHTS 

The ‘Proper Plaintiff’ Rule 

16.4.1     As a company has a personality separate from that of its members, a member of the company cannot sue to enforce rights that belong to the company. This is known as the ‘proper plaintiff’ rule, namely, that the company is the proper plaintiff in respect of any rights that it has – see Foss v Harbottle (1843) 2 Hare 461; Ng Heng Liat v Kiyue Co Ltd [2003] 4 SLR 218. Where a company has rights to be enforced, or is being sued, the usual body that is empowered to decide whether the company should either bring an action or defend the claim is the board of directors in whom the power of management is usually vested. 

Derivative Actions 

16.4.2     Notwithstanding the proper plaintiff rule, there may be occasions where a member of the company is entitled to bring an action on behalf of the company. Where a member does this, the action is referred to as a derivative action as the right is derived from the company. The member is not suing to enforce any rights that belong to him personally. In such actions, the company is included as a nominal defendant so that any decision of the court will bind the company as well. 

16.4.3     A member may bring a derivative action in respect of a wrong done to the company where the wrongdoer is the person who has control of the company and is in a position, or has used such control, to prevent a proper action from being brought against him. The wrong done may have arisen because the person in control of the company has appropriated the company’s assets for himself, or it may consist of an abuse of the powers vested in the wrongdoers, e.g. where the majority shareholders attempt to use their voting power in an illegitimate manner. In such a situation, the wrongdoers would use their control of the company to prevent a claim from being brought against themselves. Accordingly, a member will be allowed to institute a derivative action against the wrongdoers if the member is bringing the claim bona fide for the benefit of the company in circumstances where there is no other remedy available. If the action is being brought for an ulterior motive or in bad faith, the court is entitled to take that into account in determining if it is in the best interests of the company that the action should proceed. 

Statutory Derivative Action 

16.4.4     In addition to the common law derivative action discussed above, sections 216A and 216B of the Act make provision for a statutory derivative action. This action is potentially available to any member of a company, the Minister of Finance (in certain cases), or any other person who in the discretion of the court is a proper person to make an application under the section. Such persons are potential complainants under sections 216A and 216B. 

16.4.5     Section 216A(2) of the Act provides that a complainant may apply to the court for leave to bring an action in the name and on behalf of the company or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company. The court will only grant leave if the court is satisfied under section 216A(3) of the Act that the complainant has given 14 days’ notice to the directors of the company of the complainant’s intention to apply for leave; the complainant is acting in good faith; and it appears to be prima facie in the interests of the company that the action be brought, prosecuted, defended or discontinued. One advantage of the statutory derivative action is that if the court authorizes the bringing of the action, it can order the company to pay reasonable legal fees and disbursements incurred by the complainant in connection with the action. Under the common law derivative action, the risk of legal costs falls on the person bringing the action.

 16.4.6     Section 216B(1) states that an application under section 216A shall not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the company has been or may be approved by the members of the company However, evidence of approval by the members may be taken into account by the court in making an order under section 216A.

SECTION 5     SHAREHOLDER REMEDIES 

The Oppression Remedy 

16.5.1     In addition to the ability to bring a common law or statutory derivative action to protect the legitimate interests of the company, there are two other important remedies open to shareholders who feel that their interests are being prejudiced. The first arises under section 216 of the Act. Section 216(1) provides that any member or holder of a debenture of the company, or the Minister of Finance in certain cases, may apply to the court for an order that the affairs of the company are being conducted in a manner oppressive to one or more of the members or holders of debentures, or in disregard of their interests as members, shareholders or holders of debentures of the company. A similar application may be made if an act of the company has been done or is threatened which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures. Section 216 is commonly referred to as the ‘oppression remedy’.

16.5.2     Where such an application is made, and the court after hearing the evidence is satisfied that the complaint is a valid one, the court may, with a view to bringing an end or remedying the matters complained of, make such order as it thinks fit. Such orders may include directing or prohibiting any act or canceling or varying any transaction or resolution; regulating the conduct of the affairs of the company in future; authorizing civil proceedings to be brought in the name of the company; providing for the purchase of the shares and debentures of the company by other members or holders of debentures or the company itself; or even winding up the company. 

16.5.3     Section 216 of the Act is intended to provide relief to members or holders of debentures where those in control of the company exhibit conduct that is equivalent to abuse or wrongdoing. The courts are not concerned whether a company is well managed. Business decisions are for the board to make and the courts will not generally second guess business decisions. Nor are the courts concerned that a member or some members are frequently outvoted. It is part and parcel of corporate administration that decisions are taken by the majority. What the courts are concerned with is whether the affairs of the company are being run by those in control in such a way that there is a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect – see Re Kong Thai Sawmill (Miri) Sdn Bhd [1978] 2 MLJ 227. This may arise where key shareholders are excluded from management; where shareholders are deprived of information about the company; where the dominant members are clearly preferring their own interests; and where the patriarch of a family company behaves in an autocratic manner, just to give some common examples. 

Winding Up on the Just and Equitable Ground 

16.5.4     Under section 254(1)(i) of the Act, the court may wind up a company where it is just and equitable to do so. This is an important remedy for shareholders as it provides a means for disgruntled shareholders to use the winding up process to disengage from a company. 

16.5.5     The just and equitable ground for winding up has been used in a number of different circumstances. For example, where the main object of the company cannot be achieved or has been departed from, aggrieved members of the company may petition for the company to be wound up. Similarly, a company may be wound up if it engages in acts that are entirely outside of what can fairly be regarded as having been within the general contemplation and understanding of the members when they became members of the company. Another situation where the just and equitable ground has been used is where the company’s business has been carried on in a fraudulent manner. In addition, where the company is a quasi-partnership, in that the way the business is run resembles how a partnership is managed despite the use of the corporate form, and further, trust and confidence among the members has been irretrievably damaged, the court may order the winding up of the company since the members can no longer work with one another. 

SECTION 6     SHARES

16.6.1     A share is the interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders between themselves in accordance with section 39(1) of the Act – see Borland’s Trustee v Steel Brothers & Co Ltd [1901] 1 Ch 279. 

16.6.2     As mentioned earlier, the liability of a member/shareholder is to contribute to the company only that amount unpaid on the shares taken up by the member/shareholder. This is what is meant by limited liability. A shareholder is entitled to participate in the life of the company on the terms set out in the company’s constitutional documents, namely, the memorandum and articles of association, and to the extent allowed by the Act. The exact rights of the shareholder will depend on the terms of the memorandum and articles. Generally, all shareholders will be entitled to a pro-rata share of any dividends that are declared and paid. Where a company is wound up, again all shareholders are generally entitled to a pro-rata share of any assets remaining after the creditors of a company have been paid. Shareholders are also entitled to appoint and remove the directors of the company.

16.6.3     Generally speaking, there are two broad classes of shares – ordinary shares and preference shares. Preference shares, as the name suggests, are shares that confer some preference on the holders of those shares. That preference may be in the form of dividends or return of capital. For example, the terms of a preferential share may provide that the holders of those shares are entitled to a particular rate of dividend before any dividends may be paid to holders of ordinary shares.

Maintenance of Capital 

16.6.4     A company underSingaporelaw is required to maintain its capital in the sense that it cannot, as a general rule, return capital to its members. This general rule is intended to protect creditors. Creditors of a company are said to give credit to the company on the faith that the capital of the company will be applied only for the purposes of the business and therefore have a right to insist that such capital be kept and not returned to the shareholders – see Re Exchange Banking Co (1882) 21 Ch D 519. 

16.6.5     This is not to say that members of a company cannot obtain any return on their investment. Indeed, if a company makes profits in a particular year, the company may pay dividends to its shareholders out of the profits made. The rules relating to capital maintenance also do not mean that members of the company must continue to contribute to the company when trading losses have occurred thereby depleting the company’s capital. A member’s liability to the company is limited only to the amount he has agreed to contribute to the company when the shares are issued to him. The rules relating to capital maintenance simply mean that, absent profits, a company must not take any steps that in effect return capital to its shareholders. 

16.6.6     Arising from this general principle, the following 5 propositions may be made:

 (i)           a company may not purchase its own shares or those of its parent company – see section 76(1)(b) of the Act;

(ii)          a company may not lend money on the security of its own shares or those of its parent company - see section 76(1)(c) of the Act;

(iii)         a company cannot give financial assistance to a third party to purchase the company’s shares or those of its parent company – see section 76(1)(a) of the Act;

(iv)         a company cannot pay dividends except out of available profits;

(v)          a company cannot reduce its capital or otherwise return assets to its members, except to the extent the Act permits this. 

16.6.7     One of the exceptions now permitted by the Act is that a company may, in certain circumstances purchase its own shares. Such purchases must be approved by the company in general meeting. Under section 76B(1) of the Act, the articles of the company must expressly allow such share buy-backs. Payment for such purchases must be made out of the company’s distributable profits – see section 76F(1) of the Act. This preserves the position of creditors since such profits could in any event have been distributed in the form of dividends to shareholders. In addition, directors and managers of a company should not authorize any buy-backs if they know that the company is insolvent or will be insolvent as a result of such a buy-back – see section 76F(3) of the Act. 

Reduction of Capital 

16.6.8     Notwithstanding the capital maintenance rules, the Act permits a reduction of capital in certain circumstances. The most important provision is section 73(1) of the Act, which states that a company may, if so authorized by its articles by special resolution, reduce its share capital in any way and, in particular, without limiting the generality of the foregoing, may do all or any of the following:

(i)          extinguish or reduce the liability on any of its shares in respect of share capital not paid up;

(ii)         cancel any paid-up capital which is lost or unrepresented by available assets;

(iii)         pay off any paid-up share capital which is in excess of the needs of the company. 16.6.9     Any reduction must be approved by the court and, in certain circumstances, creditors are entitled to object to the reduction – see sections 73(1) – (4) of the Act. 

SECTION 7     DEBENTURES AND CHARGES 

16.7.1     A company will frequently have to borrow money for its business operations. Often when it does so, a document known as a debenture will be created. Simply put, a debenture is a document that either creates a debt or acknowledges it – see Levy v Abercorris Slate and Slab Co (1887) 37 Ch D 260. 

16.7.2     When a company borrows money, it will often give security to its creditor for the loan. Where a debtor gives security to a creditor, the creditor obtains a proprietary interest in the property of the debtor over which security has been granted. This proprietary interest in those assets allows the creditor to have priority to those assets ahead of ordinary creditors of the debtor should the debtor not be able to pay its debts. One common form of security that companies provide to its creditors is a charge over its assets. The debenture that creates or acknowledges the debt will frequently also contain the terms of the charge that is created. 

16.7.3     A charge is a non-possessory form of security, i.e. the validity and efficacy of the security is not dependent on the secured creditor having possession of the security given. For example, a company that needs to use the machinery in its factory can still grant security by way of a charge over such machinery to the bank that has provided the financing to purchase the machinery. The bank need not take possession of the machinery for the charge to be effective. Being non-possessory in nature, the charge can also be taken over intangible assets such as shares and book debts. 

16.7.4     A charge arises where, in a transaction for value, the company and its creditor show an intention that property, existing or future, will be made available as security for the payment of a debt, and that the creditor shall have a present right to have such property made available as security even though the present legal right can only be enforced at a future time, and though the creditor obtains no legal right of property but only a right at some future time to have the security made available to the creditor – see National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 at pp 449-450. 

Fixed and Floating Charges 

16.7.5     Company charges may be fixed or floating. A fixed charge is one that attaches to specified assets that are presently owned by the chargor or that may be acquired in the future, e.g. a company may grant a fixed charge over all the machinery presently in its factory and any machinery subsequently acquired for the factory. As the fixed charge immediately attaches to the specified assets, either at the creation of the charge or upon later acquisition, the company cannot dispose of the charged assets to a third party. If the company does so, this is a breach of the terms of the charge and the third party will not obtain good title to the assets, unless the third party has provided value for the purchase and did not know of the existence of the fixed

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