On The Floating Charge

The floating charge system originates from the law of equity of Britain which has a history of more than 150 years. At its very beginning, it was designed to meet the financing need of the British companies. With the practical proof of more than one century, the floating charge system has not only taken a huge leap forward in Britain, but also been successfully introduced to other countries. It makes a great contribution to the expansion of financing. The floating charge system has also been introduced into the Real Right Law of China which was implemented on July 1st,2007. For its advantages in expanding the assurance capability of the mortgager while has no impact on the normal operation of the creditor and limitation of the economic effectiveness by reducing assurance, it plays an important part to change the status of financing difficulty for the Chinese companies, especially the medium and small companies. The Chinese entity economy has experienced an extremely shock from the financial crisis of 2008, the companies are in a struggle situation, many of them are facing a bankrupt due to the difficulty of finance turnover. As a new way of assurance, the floating charge system could expand the assurance capability of the companies, bring a new way for financing at a system level, and provide a new chance for the companies to break away from the difficulties and take the operation to normal.However, the floating charge system has not been widely used in China. The reason is mainly in the following three aspects. First, the floating charge in which there are some defects is not perfect, second, China's real right law makes a brief summary of the principles of the floating charge style in just three provisions not making a complete system requires of the specific content. Third, China's realities as well as related facilities restrict its progress. How to improve and innovate the floating charge system and how to overcome the inherent defects in the floating charge system by improving the supporting facilities is a very important topic as far as our situation.This paper first introduces the overview of the floating charge and followed describes a detailed analysis about the system running in practice. Then this paper not only set forth the advantages of the system but also reveals the flaws in the system changed by value analysis of the floating charge system. The second chapter examines the floating charge internationally. The writer briefly introduces the positions that the floating charge is spread in continental law countries such as Japan, Germany, France and Anglo-American law countries such as American and the English speaking jurisdictions. While the writer at length introduces the floating charge has been transferred to the legal systems of Scotland. Chapter three contents the establishment and the potency of floating charge. This chapter take the floating charge in England as a foundation, introduce the priority of floating charge.The last two chapters is the focus of this paper. The fourth chapter discusses how to guard against the risk of a floating charge, in the form of case studies, by taking our country's success stories for example. The final chapter makes a shallow proposal about the imperfect status of a floating charge in China law with a view to promoting the system to play their application value and role as soon as possible.