MEMBERS AND FINANCE LAW CLC CQ60/22CLC.pdf

LAW

1. MEMBERS AND FINANCE
OF A COMPANY
M.A. Bùi Hà Hạnh Quyên
[email protected]
Faculty of Economics, Academy of Finance, Hanoi, Vietnam
1

2. Content
I.MEMBER
II.MAJORITY RULE AND MINORITY PROTECTION
III.COMPANY MEETING
IV.CAPITAL
2

3. I. MEMBER
Thesubscribersofacompany’smemorandum are
deemedtohaveagreedtobecomemembersofthe
company.
=>Theyarethefirstmembersofcompany
Everyotherpersonwhoagreestobecomeamemberof
acompany,andwhosenameisregisteredonitsregister
ofmembers,isamemberofthecompany.
3

4. Characteristics
Themembershaveinvestedmoneyinthecompanyand
theyhopetoprofitfromthecompany.
Themembersareownersandtheyhavecontrolofthe
company.
Whilethecompanyexists,theprofittothemembers
mightcomeintheformofadividendpaidontheir
sharesorfromtheirinvestmentincreasinginvalue.
Uponliquidation,thesurplusassetsofthecompanywill
bedividedamongstsomeorallofthemembers.
4

5. II. MAJORITY RULE AND
MINORITY PROTECTION
Amemberofacompanywhoownsthemajorityofthe
company’svotingsharescanensurethatanordinary
resolutionispassed.
Iftwoshareholderseachown50%ofacompany’sshares
thentheywillbothhavenegativecontrolofthecompany.In
otherhand,ifcompletedeadlockisreachedthenthecourt
maywellwindthecompanyup(ifeitherpartysorequests)on
thegroundthattodosowouldbejustandequitable.
Whentheshareholderswhocontrolthecompanydefraudthe
minorityshareholdersordistributeallofthecompany’sprofits
assalaryattheexpenseofpayinganydividends,ifthere
werenoexceptionstotheruletheminoritywouldbe
powerless.
5

6. 1. THE RULE IN “Foss v Harbottle” (1843)
Ifawrongisdonetoacompanythenonlythecompany
hastherighttosueinrespectofthatwrong,andthatthe
courtwillnotinterferewiththeinternalmanagementofa
companywhilethecompanyisactingwithinitspowers.
Thisrulepreventsthehugenumberoflegalactions
whichwouldinevitablyariseifanymemberofa
companyhadthepowertosueonthecompany’s
behalf.Therulealsoupholdsageneralprincipleof
companylaw–thatifthemembersofacompanyarein
disagreementtheyshouldresolvethisatageneral
meetingofthecompany.
6

7. Foss v Harbottle (1843)
Fact:
FosstogetherwithStarkieTurtonwereshareholdersinthe“VictoriaPark
Company”.ThecompanywasincorporatedbyanactofParliament.
Theybroughtanactionagainsttheirdirectorsformisappropriationof
thecompany’sassets.Theclaimantsallegedthatthepropertyofthe
companyhadbeenmisappliedandwastedandvariousmortgages
weregivenimproperlyoverthecompany’sproperty.Theyaskedthat
theguiltypartiesbeheldaccountabletothecompanyandthata
receiverbeappointed
Issue:Whetherornotacompany’srighttosuecanbeexercisedby
it’scooperatecharactersintheirowncapacityorinthenameofthe
company.
Held:Asageneralrule,ashareholdercannotsueforwrongdone
toacompanyortorecovermoneyasdamagesduetoit,unlessthe
actionistakenbythecompanyitself.Theproperplaintiffinthis
action,awrongdoneagainstacompany,isthecompany.
7

8. 2. FRAUD ON THE MINORITY
Ifthemajorityoftheshareholdersweretodividetheassetsofthecompany
amongstthemselves,totheexclusionoftheminority,asmentionedabove,
thenitisclearonthecaselawthatthiswouldamounttoafraudona
minority.
Whenawrongisdonetoacompany,ashareholderwhoisallowedtosue
despitetheruleinFossvHarbottleissaidtohavearighttobringa
derivativeaction.Heisbringinganactionforthecompany’sbenefit,orto
enforcearightofthecompany,andjoinsthecompanyasadefendant
becausethosewhocontrolthecompanywillnotallowthecompanytoact
asaclaimant.(Themember’srighttosuederivesfromtherighttosue
whichthecompanyhasnotexercised.)Iftheactionissuccessfularemedy
isgiventothecompanyratherthantotheclaimant.Anyjudgmentgained
isenforceablebytheothershareholdersandisbindinguponthem.
8

9. In decide to grant permission, the court
will have regard to:
Whetherthememberisactingingoodfaith
Theimportancethatapersonpromotingthesuccessof
thecompanywouldattachtoit
Whetherauthorisationorratificationbythecompanyis
likely
Whetherthecompanyhasdicidednottopursuethe
claim
Whetheritsmembercouldpursuetheclaimintheirown
rightratherthanonbehalfofthecompany
Theviewsofmemberswithnopersonalinterestinthe
matter.
9

10. Example:
Cook v Deeks [1916]
Cookwasoneof4directorsinaconstructioncompany.The
company hadoftendoneprofitablebusinesswiththe
CanadianPacificRailwayCompanyandhadbuiltupagood
relationshipwiththiscompany.Whenanewcontractwiththe
CanadianPacificRailwayCompany hadfinishedbeing
negotiated,theother3directorsmadethecontractintheir
ownnamesratherthaninthecompanyname.The3directors
(whoowned75%oftheshares)thenpassedaresolutionthat
thecompanyhadnointerestinthenewcontract.Cook
claimedthattheresolutionwasineffectiveandthatthe
benefitofthecontractshouldgotothecompany.
Held.Theresolutionwasineffectiveandthecompanywas
entitledtothebenefitofthecontract.
10

11. Example:
Menier v Hooper’s Telegraph Works (1874)
E.Limited(E)hadallotted5.325ordinaryshares,3.000ofthese
beingallottedtoH.Limited(H).Ehadwonaconcessionfrom
thePortuguesegovernmenttolayatransatlanticcablefrom
PortugaltoBrazil.Hweretomanufacturethecable.Hthen
foundthattheycouldmakemoremoneybylayingthecable
foranothercompany,andHmanagedtopersuadethe
Portuguesegovernment totransferthecable-laying
concessiontothisothercompany.TopreventEfromsuing,H
usedits3.000sharestowindEup.Theclaimant,aminority
shareholder,broughtanactiononbehalfofhimselfandthe
otherminorityshareholders.
Held.Theclaimantwasentitledtobringtheaction.Hhad
committedafraudontheminorityandhadtoaccounttoE
fortheprofitsmade.
11

12. Example:
Clemens v Clemens Bros Ltd [1976]
Theclaimantheld45%oftheissuedsharecapitalofacompanyandher
auntheld55%.Thecompanyoperatedinthebuildingtradeandwasvery
successful.Thearticlesprovidedthatifeithershareholderwishedtosellher
shares,theotherhadtherighttobuythem.Theclaimantthereforehad
negativecontrolofthecompanyandifsheoutlivedherauntwould
eventuallyhavetotalcontrol.Theauntandfournon-shareholderswere
directors.Thefivedirectorsproposedtoissuealargenumberofnewshares
tothemselvesandtoaspecialemployees’trust.Theeffectofthiswouldbe
thattheclaimant’sholdingwouldfalltobelow25%.Theauntusedher
sharestopasstheresolution.Inthethreeyearspriortotheresolutionthe
directors’totalemolumentsexceededthecompany’spre-taxprofit.The
claimantbroughtanactionagainstthecompanyandheraunt,askingfor
theresolutiontobesetaside.
Held.Theresolutionwassetaside.Itwasafraudontheminority,itsreal
purposebeingtodeprivetheclaimantofhercontrolofthecompany.The
auntwasboundbyequitableconsiderationswhichcouldpreventherfrom
exercisinghercontrolofthecompanyincertainways.
12

13. 3. STATUTORY PROTECTION OF THE
MINORITY
Those with a minority shareholding in a company are
given various statutory rights.
Company Act 2006: Section 292; 303; 633
13

14. 4. UNFAIR PREJUDICE
Anycompanymember,orthepersonalrepresentative
ofadeceasedmember,maypetitionthecourtonthe
groundsthattheaffairsofthecompanyarebeing,or
havebeen,orwillbe,conductedinamannerwhichis
unfairlyprejudicialtothemembersgenerallyorto
particularmembers.
14

15. If the court agrees that the conduct is
unfairly prejudicial it can:
Orderthecompanytobehaveinacertainwayinthe
future.
Preventthecompanyfromdoingcertainacts.
Orderthecompanytosueforawrongdonetoit.
Ordersomemembersofthecompany,orthecompany
itself,tobuythesharesofothermembersatafairprice.
Makeanyorderwhichitseesfit.
15

16. Example:
O'Neill v Phillips[1999]
MrPhillips(P)owneda75%shareholdingofacompanycalledPectelLtd.Mr
O'Neill(O)startedtoworkforthecompanyin1983.In1985,Pwassoimpressed
withO'sworkthathemadehimadirectorandgavehim25%oftheshares.They
hadaninformalchatinMay1985,andPsaidthatoneday,hehopedOcould
takeoverthewholemanagement,andwouldthenbeallowedtodraw50%of
thecompany'sprofits.PretiredandOtookovermanagement.Therewere
furthertalksaboutincreasingO'sactualshareholdingto50%,butthisdidnot
happen.After5yearsthebusinessdeclined.Pcamebackinandtookbusiness
control.HedemotedOtobeabranchmanageroftheGermanoperationsand
withdrewO'sshareoftheprofits.However,Oremainedadirector.Oclaimed
unfairlyprejudicialfortheterminationofequalprofit-sharingandthealleged
repudiationagreementfortheallotmentofmoreshares.
Held:
TheHouseofLordheldthattherewasnofirmagreementtoincreaseO's
shareholdingandsohehadnolegitimateexpectationofsuchactionthatthelaw
wouldenforce.ThemostimportantfeatureofthecasewasthatPhadnever
actuallyagreedtotransferOthesharesofthecompany,soitcouldnotbeunfair
thathehaddecidednotto,becausehehadneverdecidedtoactuallydoso.It
wasconsideredquitefairthatPshouldretainamajorityshareholdingandexercise
controlinthewayhedid.
16

17. 5. PETITION FOR WINDING-UP
Acourtcanwindacompanyuponthegroundsthatitis
justandequitabletodoso.
Evenasingleshareholdercanpetitionthecourttodo
this.
Whetherornotitisjustandequitabletowinda
companyupisaquestionoffactineverycaseandwill
dependuponthecircumstancesofthecase.
Example:EbrahimivWestbourneGalleriesLtd(1973).
17

18. III. COMPANY MEETING
TYPE OF
MEETINGS
NOTICE OF
MEETINGS
TYPES OF
RESOLUTIONS
18

19. 1. TYPE OF MEETINGS19

20. 2. NOTICE OF MEETINGS
Properandadequatenoticemustbesenttoallthose
whoareentitledtoattendanymeeting.
20

21. 3. TYPES OF RESOLUTIONS
21

22. Written resolutions
Anythingwhichinthecaseofaprivatecompanymight
bedonebyresolutioninageneralorclassmeetingmay
bedonebyresolutioninwriting,signedby,oronbehalf
of,allmemberswhowouldbeentitledtoattendand
voteatsuchmeeting.
However,resolutionsfortheremovalofdirectorsor
auditorsbeforeexpiryoftheirtermofofficecannotbe
thesubjectofwrittenresolutions.
Thewrittenresolutionrequiresunanimity.
22

23. IV. CAPITAL23

24. 1. SHARE CAPITAL
Thecapitalwhichisinvestedinacompanylimitedby
sharesbyshareholdersiscallitssharecapital.
24

25. Liability
Shareholdersmustpayatleastthefullnominalvalueof
anysharesissuedtothem.
Butwhere,asisquitecommon,thecompanyissues
sharesata“premium”,thatis,atmorethanthenominal
valueoftheshares,thentheholdersofthoseshareswill
beliabletopaytheamountowedoverandabovethe
nominalvalue.
25

26. Interest
Theshareisaformofpropertyofshareholders.
Whatshareholderspossessisarighttoreceiveapartof
theprofitgeneratedbythebusinessofcompany
Thisrightiscontingentuponthecompanymakinga
profitandthedirectorsrecommendingthedeclaration
ofadividend.
26

27. Mutual covenants
Sharesarepersonalpropertyandaretransferableinthe
mannerprovidedforinthecompany’sarticlesof
association.
27

28. 2. TYPES OF SHARE CAPITAL
28

29. Types Definition
Nominal or
authorised
capital
Thisisthefigurestatedinthecompany’smemorandum of
association.Itsetsthemaximumnumberofsharesthatthe
companycanissue,togetherwiththevalueofeachshare.
Issued or
allotted capital
Thisrepresentsthenominalvalueofthesharesactually
issuedbythecompany.
Paid up capital
Thisistheproportionofthenominalvalueoftheissued
capitalactuallypaidbytheshareholder
Uncalled
capital
Whereacompanyhasissuedsharesasnotfullypaidup,it
canatalatertimemakeacallonthoseshares.Inother
words,uncalledcapitalistheamountremainingunpaidon
issuedcapital.
Called up
share capital
Somecompaniesmayissuesharestoinvestorswiththe
understandingtheywillbepaidatalaterdate
Reserve
capital
Theunpaidcapitalthenbecomesareserve,onlytobe
calleduponifthecompanycannotpayitsdebtsfrom
existingassetsintheeventofitsliquidation
29

30. 3. TYPES OF SHARES30

31. Ordinaryshares:Thesesharesaresometimesreferredtoas‘equity
inthecompany’.Ownershipofordinarysharesentitlestheholderto
attendandvoteatgeneralmeetings
Preferenceshares:Theseareshareswithdividendsthatarepaidout
beforecommonstock.Ifthecompanyentersbankruptcy,preferred
stockholdersareentitledtobepaidfromcompanyassetsbefore
common stockholders.Mostpreferenceshareshaveafixed
dividend,whilecommonstocksgenerallydonot.Preferredstock
shareholdersalsotypicallydonotholdanyvotingrights,but
commonshareholdersusuallydo.
Deferredshares:Thistypeofsharepostponestherightsofitsholder
todividendsuntilaftertheordinaryshareholdershavereceiveda
fixedreturn.
31

32. 32

33. Other shares
Redeemable shares:Thesesharesissuedonthe
understandingthattheymaybeboughtbackbythe
company.Redemptionmaybeattheoptionofeither
thecompanyortheshareholder,dependingonthe
termsofissue.
33

34. 4. ISSUE OF SHARES
Directorsgenerallyarenotallowedtoissueshares
withouttheauthorityofthemembers.
Inpractice,however,itisusualforthemtobegranted
generalauthoritytoissuethecompany’ssharesasthey
seefit,undertheAssociationofArticles.
Thedirectorsmustnotusetheirpowertoissuesharesfor
animproperpurpose.
34

35. Example:
Hogg v Cramphorn (1967)
Fact
HoggapproachedtheboardofdirectorsofCramphornLtd.tomakea
takeoverofferforthecompany.Thedirectorsbelievedthatthe
takeoverwouldbebadforthecompanyandsotheyissuednewshares
toatrustsothattheycouldoutvoteHogg'sbidformajoritycontrol.
Held
Thenewsharesissuedbythedirectorsareinvalid.Thedirectorsviolated
theirdutiesasdirectorsbyissuingsharesforthepurposeofpreventing
thetakeover.Thepowertoissuesharescreatesafiduciarydutyand
mustonlybeexercisedinordertoraisecapitalandnotforanyother
purposessuchastopreventatakeover.Theactcouldnotbejustified
onthebasisthatthedirectorshonestlybelievedthatitwouldbeinthe
bestinterestofthecompany.Theimproperissuanceofsharescanonly
bemadevalidifthedecisionisratifiedbytheshareholdersatageneral
meeting.
35

36. 5. PAYMENT FOR SHARES
Sharesareonlytreatedaspaidupwhenthecompany
hasreceivedmoneyormoney’sworth.
Anyshortfallinpaymentwillhavetobemadeupinthe
futureandthisisespeciallytrueifthecompanygoesinto
insolventliquidation.
36

37. 6. CAPITAL MAINTENANCE
Oncethecapitalhasbeenreceivedbythecompany,
thereareimportantrulescontrollingwhatcanbedone
withcapital,or,moreaccurately,controllingwhat
cannotbedonewithit.
37

38. 6.1. Capital reduction
Acompanymayreduceitscapitalinanyway,ifso
authorisedinitsarticles,bypassingaspecialresolution
tothatend.
Anyproposaltoreduceacompany’scapitalissubject
toconfirmationbythecourt,onsuchtermsasitthinksfit.
Inconsideringanycapitalreductionscheme,thecourt
willtakeintoaccounttheinterestsnotjustofthe
membersandcreditorsofthecompany,butofthe
generalpublicaswell.
38

39. There are three particular ways inwhich
such capital can be reduced by:
removingorreducingliabilityforanycapitalremainingasyet
unpaid,thatis,decidingthatthecompanywillnotneedtomake
anycallonthatunpaidcapitalinthefuture;
cancellinganypaidupsharecapitalwhichhasbeenlostthrough
tradingandisunrepresentedinthecurrentassetsofthecompany,
thatis,bringingthebalancesheetintobalanceatalowerlevelby
reducingthecapitalliabilitiesinacknowledgement ofthelossof
assets;
payingoffanyalreadypaidupsharecapitalthatisinexcessofthe
company’srequirement,eithernoworinthefuture,thatis,giving
theshareholdersbacksomeofthecapitalthattheyhaveinvested
inthecompany.
39

40. 6.2. Redemption of shares
Wheresharesareredeemed,theamountofthe
company’sissuedsharecapitalisdiminished
accordingly.
Redeemablesharescanonlybeissuedifthecompany
issuedothershares.
Thesharesmustbefullypaid.
Redeemable sharesandthepremiumcanonlybe
redeemedoutofdistributableprofitsofthecompanyor
outoftheproceedsofafreshissueofsharesmade
specificallyforthepurposeoftheredemption.
40

41. 6.3. Purchase of own shares
Alimitedcompanymayifauthorisedtodobyitsarticles
purchaseitsownshares.
Thesharesmustbefullypaidandanypurchasemustbe
financedoutofdistributableprofitsortheproceedsofa
freshissue.
41

42. 3 distinct ways in which companies
can buy their ownshares:
Throughamarketpurchase,conductedundertherules
ofrecognizedinvestmentexchange
Throughanoff-marketpurchase,whicheffectively
relatestoanyothermethodofpurchase
Throughacontingentpurchasecontract,which
essentiallyrelatestooptionstobuyshares
42

43. 43

44. 6.4. Financial assistance to buy shares
Itcoversgifts,loansandanyothertransactionsthatallowthe
purchaserofthesharestousethecompany’sassetstopay
forthoseshares.
Englishlawmakesitillegalforapubliccompanytoprovide
financialassistancetoanypersontoenablethemtobuy
sharesinthecompany.Privatecompaniesareallowedto
providefinancialassistance,aslongasitdoesnotcomeout
ofthecompany’scapital,butonlyfromprofitsavailablefor
distribution.
Thecompany,andanyofficer,inbreachofthesectionis
liabletocriminalsanctions.
Themostsignificantexceptionallowsthecompanytofinance
sharepurchasesaslongasitisdoneingoodfaithandinthe
pursuitofsomelargerpurpose.
44

45. 6.5. Distribution/dividend
law
Dividendsmayonlybepaidout
ofaccumulatedprofitsandnotif
theeffectwouldbetoreduce
thecompany’snetassetsbelow
thevalueofitssharecapital.
Adividendpaidinbreachofthis
ruleisunlawfulandultravires.A
directorwhoknew(oroughtto
haveknown)thatthepayment
amountedtoabreachisliableto
repaythedividends.
45

46. Re Exchange Banking Co., Flitcroft’sCase
(1982)
Fact:
ThedirectorsoftheExchangeBankingCompanyhadpresented
accountreportsbeforeshareholdermeetings,whichwere
untrue.Between1873and1878theypaidhalfyearlydividends
totalling£3,192whentheyknewitemsintheaccountswerebad
debts,irrecoverableandconsequentlytherewereno
distributableprofits.Theshareholdersactedonthereportsand
declareddividends.Theliquidatorissuedasummonsagainst
fiveformerdirectors.
Held:
SirGeorgeJesselMRandBrettLJheldunequivocallythatthe
dividendswererecoverableinfull,andwouldhavebeeneven
hadthecompanyremainedsolvent.
46

47. 7. LOAN CAPITAL
Atradingcompanyhasanimpliedpowertoborrow
moneyforbusinesspurposesthroughdirectorsorBOD.
Althoughoutsiderswholendmoneywillnotbeaffected
bythecompany’slackofcapacitytomaketheloan,
thedirectorswhoauthorisetheloanmightbepersonally
liableiflossiscausedtothecompany.
47

48. 7.1. Debentures
Debentureoftenusedbycompaniestoraisemoney,
thatispaidbackoveralongperiodoftimeandata
fixedrateofinterest.Adebentureisusuallyaformal
legaldocument.
48

49. There are certain distinctions between
shares and debentures:
49

50. 7.2. Charge
Thereisnothingtopreventtheinterestondebentures
frombeingpaidoutofcapitalifthereisinsufficientprofit
fromwhichtopayit.Thepersonlendingmoneytoa
companywillwanthisdebenturetobebackedupby
security.
Therearetwotypesofsecurityforcompanyloans:fixed
chargeandfloatingcharge.
50

51. Fixed charges
Thismeansthecompany mortgagesassetstothe
creditor(thedebentureholder).
Consequently,thecompanywillnotbeabletodispose
of,orchangethenatureof,thepropertycharged
withoutthepermissionofthedebentureholder.
Theassetmostcommonlysubjecttofixedchargesis
land.
51

52. Example
ACoLtdwantstoborrow£120.000fromthebank.The
banklendsthemoneybuttakesafixedchargeonthe
company’sfactory.Aslongasthecompanyisrepaying
theloanasagreeditwillretainpossessionofthefactory
andcanuseitintheordinaryway.Thecompanycannot
howeversellthefactorywithoutthebank’spermission.
Furthermore,ifthecompanyfailstorepaythedebtthe
bankcansellthefactoryanddeductwhatitisowed
fromtheproceedsofsale.
52

53. Floating charges
Afloatingchargepermitsacompanytodealwiththe
chargedassetswithoutthepermissionofthe
chargeholderuntilsuchtimeasthechargecrystallises
(therebybecomingafixedcharge)
53

54. Example
CCoLtd,whichmanufacturesTV,hasalreadygrantedafixed
chargeoverallthoseassets,suchasitsfactoryanditscompany
cars,whichitdoesnotneedtosell.Inaddition,Chasawarehouse
stockedwithTVreadyforsale.Cisowedmoneybyvarious
creditorsandthatithasalargestockofmaterialswithwhichit
makestheTV.Noneoftheseremainingassetscouldbethesubject
ofafixedchargewithoutcripplingthecompany’sactivities.C
wouldnotbeabletoselltheTValreadymanufactured,orworkthe
rawmaterialsintoTV,withoutthepermissionofthefixed
chargeholder.Ifsuchpermissionwasgrantedthechargeholders
wouldthenlosetheirsecurity.ButthefinishedTV,themoneyowed
andtherawmaterialsareworthagreatdeal.Acreditormightwell
thereforetakeafloatingchargeovertheseassets,secureinthe
knowledgethatifCdidnotrepayhimhecouldrecouphisloanby
callinginthecharge,sellingtheassetscharged,anddeducting
whathewasowedfromtheproceeds.
54

55. Fixed
charge
Debtor cannotdeal
with the charged
assets without the
permission of the
chargeholder
Cannotbecome a
floating charge
Floating
charge
Debtor candeal
with the charged
assets without the
permission of the
chargeholder
Canbecome a
fixed charge
55

56. Crystallisation
Acompanycancontinuetosellassetsoverwhicha
floatingchargehasbeengrantedupuntilthetimeof
‘crystallisation’.
Iftheassetswhichwerethesubjectofthechargeare
soldaftercrystallisationthenthechargeholdercan
recoverthemfromthepartytowhomtheyweresold.
56

57. Crystallisation occurs automaticall:
Crystallisation
When a receiver is appointed.
When the company goes into liquidation.
When the company ceases to carry on business.
On the occurrence of an event which the contract stipulated would
lead to automatic crystallisation.
When the debenture holder gives notice that he is converting the
floating charge into a fixed charge
57

58. 7.3. Priority of charges
Legalchargesrankaccordingtotheorderofcreation.
Equitablechargesalsotakepriorityaccordingtotheorderof
creation.
Alegalchargecreatedbeforeanequitableonehaspriority.
Anequitablechargecreatedbeforealegalchargewillonly
takepriorityoverthelatterif,whenthelatterwascreated,the
legalchargehadnoticeoftheequitablecharge.
Afixedchargerankshigherthanexistingfloatingcharges
unlessthefloatingchargeexpresslyprohibitsthecreationof
anotherchargeoverthesamepropertyandtheperson
takingthelaterfixedchargeknewthatthiswasthecase.
58

59. 59