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    Methods To Secure The New Financing

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    mystogan0
    The document discusses three methods to secure new financing for FTSB from Exports Bank: 1) A legal charge on land owned by FTSB which requires registration and verification that FTSB is the registered owner. 2) A debenture on FTSB's assets which requires registration within 30 days to be valid and restricts FTSB's ability to deal with secured assets without consent. 3) Personal guarantees from the directors of FTSB which make them jointly and severally liable for FTSB's debt even if an individual director becomes bankrupt or deceased.

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    Methods To Secure The New Financing

    Uploaded by

    mystogan0
    9 views2 pages
    The document discusses three methods to secure new financing for FTSB from Exports Bank: 1) A legal charge on land owned by FTSB which requires registration and verification that FTSB is the registered owner. 2) A debenture on FTSB's assets which requires registration within 30 days to be valid and restricts FTSB's ability to deal with secured assets without consent. 3) Personal guarantees from the directors of FTSB which make them jointly and severally liable for FTSB's debt even if an individual director becomes bankrupt or deceased.

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    Methods to secure the new financing

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    The document discusses three methods to secure new financing for FTSB from Exports Bank: 1) A legal charge on land owned by FTSB which requires registration and verification that FTSB is the registered owner. 2) A debenture on FTSB's assets which requires registration within 30 days to be valid and restricts FTSB's ability to deal with secured assets without consent. 3) Personal guarantees from the directors of FTSB which make them jointly and severally liable for FTSB's debt even if an individual director becomes bankrupt or deceased.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    9 views2 pages

    Methods To Secure The New Financing

    Uploaded by

    mystogan0
    The document discusses three methods to secure new financing for FTSB from Exports Bank: 1) A legal charge on land owned by FTSB which requires registration and verification that FTSB is the registered owner. 2) A debenture on FTSB's assets which requires registration within 30 days to be valid and restricts FTSB's ability to deal with secured assets without consent. 3) Personal guarantees from the directors of FTSB which make them jointly and severally liable for FTSB's debt even if an individual director becomes bankrupt or deceased.

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    © All Rights Reserved
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    of 2

    Methods to secure the new financing

    Firstly, is for the legal charge which was created under the land, No.1370, Lot No. 2469,
    Mukim of Batu, Muar, Johor. In order to secure security by legal charge, the land must be
    register under relevant Land Office based on Section 242 of National Land Code (NLC). In the
    process of registration, Form 16A or Form 16B is given for legal charge to be more sustainable.
    Before the lender or the Exports Bank take the security, the lender must search at Companies
    Commission to make sure there is no any encumbrances attached to the security. The purpose is
    to verify all the particular document of the title and to make sure the registered owner of the land
    is FTSB.

    When preparing legal charge correct and proper statutory Form are needed to conform
    that the particular are accurate. All the signature should be written in blue-black or black ink in
    order to obtain consent from the State Authority. To get the repayment of the loan Letter of
    Undertaking, legal charge of the land and Memorandum of Transfer are needed. In the last stage
    of documentation process legal charge must be presented to Land Office. The Exports Bank will
    be fully secured after all the registration of the security document been obtain. However, due to
    an outstanding loan with an RM 500,000 with Fair Bank and the Title Deed is encumbered to
    Fair Bank. Exports Bank required to pay Fair Bank an amount of RM 500,000 in order to
    discharge of charge and the title deed of the land. If the title deed is found to have encumbrances,
    letter of undertaking need to be obtain by Exports Bank from FTSB to get repayment of the loan.
    Furthermore, to create subsequent charge FTSB need obtain the approval or consent from the
    Exports Bank. The subsequent charge may proceeds to “pari passu” basis even after the approval
    from the Exports Bank. Which mean the bank who have the first legal charges will receive the
    first proceeds and balance. Exports Bank has been given rights of power to sale which only can
    be carried out with Court Order.

    Secondly, the security is debenture. According to current law, companies are legally
    qualified to create debenture only when the companies are registered under the Companies Act
    1965. Company must possess a legal authority to obtain a loan and guarantees are provided for
    the default from the borrower except it is prohibited under company’s Memorandum and Articles
    of Association (M&A). If there was a restriction stated, bank also must concern on the
    restrictions that has been fixed by the M&A. Moreover, bank should make certain that FTSB has
    file at Companies Commission, an asset with a high value is essential, and ensure the director
    have executed all documents and if the resolution of board of director entitle the company to
    create debenture, then all document attached an endorsed. Within 30 days of the creation of
    charge in statutory Form 34, the debenture must be register, in order to make sure the debenture
    is valid. The assets of FTSB should also be register.

    In addition, FTSB cannot deal with the building without obtaining the consent from
    Exports Bank, if fixed charge is created on the industrial building. Meanwhile, if the floating
    charge is created, FTSB can deal with the building without the consent from Exports Bank.
    However, Exports Bank are allow to review the assets frequently, in case the asset is fall to third
    parties or being disposed by FTSB. If FTSB commence a winding up or bankrupt, the floating
    charge will “crystallise” upon certain even occur such as FTSB default in payment or stop their
    business.

    Lastly, the securities is guarantees. According to the cases, the contract of guarantee are
    include such as the existing directors of FTSB which are Madam Soo Li Fern, Mr. Kenneth
    Wong, Mr. Clement Tan and Encik Abang Joe. The joint and several guarantees are provided by
    the existing director. Principal creditor is the Exports Bank and FTSB will be principal debtor.
    All guarantors are jointly bound as one guarantee and also severally as separate guarantors and
    also every guarantors need to sign one document, in order for the guarantee to be sustainable.
    Plus, each of the guarantors will be equally liable for the debt after they sign the joint and several
    guarantees. Exports Bank have the right to sue all the guarantor if the bank does not satisfied
    with the debt. Hence, the estate of the particular guarantor will still be liable for advances made
    prior to each of the events when the director is bankrupt or deceased.

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