• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Alteration of articles (common law restriction) and Priority of charges

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Alteration of articles (common law restriction) and Priority of charges

  • This topic has 1 reply, 2 voices, and was last updated 14 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 8, 2011 at 12:59 pm #47690
    nadir
    Member
    • Topics: 71
    • Replies: 43
    • ☆☆

    Can you please explain me these in simpler words:
    1. An alteration is not invalid merely because it causes a breach of contract – but that does not excuse breach. (Chapter Alteration of articles)

    2. A chargeholder can prohibit the creation of a later charge with the priority, but the prohibition is only effective if a subsequent chargee has notice of the prohibition as well as the charge. (Chapter Priority of Charges)

    Please REPLY, Thanks in advance

    March 9, 2011 at 12:27 pm #79673
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    1 – articles cannot create a contract with an outsider, so where such a “contract” is within the articles, the articles can be changed. However, as in the case Southern Fouundries v Shirlaw, such an alteration had the effect that a director then lost office and was able to sue for breach of an employment contract.

    2 – where a floating debenture has been issued in exchange for money received by way of loan, is remains available for the company to borrow more money using the same assets to secure a fixed charge debenture. That later fixed charge debenture will take priority over the earlier floating charge debenture – that’s the rules! So, when the floating lender accepts the debt instrument, they should ensure that there is a “negative pledge” clause requiring the borrowing company to notify the floater of their intentions to borrow using the same assets as security. Then it’s up to the floater whether they want immediate repayment or whether they are prepared to accept the demotion into second place.

    But the company must notify the second lender.

    This would also apply where a second floater was issued as a priority debenture. The second lender must be notified – otherwise they could claim priority where they did not know of the earlier debt

    Hth

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • dkessilfie on FM Chapter 1 Questions – Financial management objectives
  • ahmadhoney on ACCA Advanced Audit and Assurance (AAA) The Audit Report 3: Types of Audit Report
  • Bimasha@123 on Discounted Cash Flow Techniques – ACCA Advanced Performance Management (APM)
  • Ken Garrett on Discounted Cash Flow Techniques – ACCA Advanced Performance Management (APM)
  • Bimasha@123 on Discounted Cash Flow Techniques – ACCA Advanced Performance Management (APM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in