The Application Of Negative Pledge In Floating Charges

The floating charge system is a kind of guarantee upon all the current and future assets,which is freely managed and provided by the enterprises.This system originated from equity law of UK in the 19^th century,followed by many civil law system countries.Our Property Law provides floating charge system in the fourth part of Security Interest.The introduction of this system perfects the assets charge form,enhances the efficient use of property,and improves the financing capacity of the mortgagor.Comparing with a fixed charge,floating charge shows its most distinctive advantage in that the borrower is free dispose of the secured assets during the ordinary course of its business.But with the advantage of promoting the quick and efficient operation of the borrower's enterprise,floating charge also makes the lender unable to control the disposal of the secured assets which can be more set as a 'fixed charge' on which the priority could take precedence of it.As a result,the interests of the lender cannot be fully protected.If the interests of the lender cannot be guaranteed,it is bound to affect the application and development of the floating charge system in our country.To overcome the defects of floating charge system,the lender often makes use of negative pledge clauses in the contract to restrain the borrower setting more legal forms to benefit other creditors,so as to realize the interests of the lender himself.It is the application of negative pledge clauses that there is great significance for charge system to overcome the proper limit.The author have carried out some fundamental research of negative pledge clauses such as characters,effect and function,and focused on the necessity and system design of negative pledge clauses in our floating charge system in practice.Therefore,some authentic proposals can be benefit for the recognition of the effects of negative pledge clauses in floating charge system,and can develop floating charge as a new system in our country.In addition to the introduction and conclusion of this paper,the total is divided into four chapters.Chapterâ… is the definition of negative pledge clauses,which introduces the implication,property and types of the negative pledge clauses originated from Common Law Legal Family.And the author analyzes the difference that between negative pledge clauses and limited commercial practice,and the natural relationship that with the floating charge system.Chapterâ…¡is the analysis of negative pledge clauses itself.In this chapter,the author analyzes the structure,jurisprudence,and effect of negative pledge clause which is often used in the practice of international financing.Chapterâ…¢is the feasibility analysis of negative pledge clauses of the introduction to Civil Code,which analyzes the introduction necessity of negative pledge clauses from the provisions in other countries and the legislation situation in our country.Chapterâ…£is the System Design for negative pledge clauses of floating charges.Considering of the legislation situation in China,the author proposes the concrete system design to overcome the proper limit from aspects of negative charge clauses,such as the definition,priority confirmation,and openness registry.