The Effect Of Negative Pledge Clause In The Floating Charge

Negative pledge clause in the floating mortgage system is a kind of agreement tolimit the parties behavior of floating mortgage people to dispose of the mortgagedproperty in the establishment of the floating mortgage. The floating charge system tobroaden the financing channels of market main body, has an important role topromote the optimal allocation of social resources. To construct a perfect system offloating charge has the practical operability, first of all to limitations clearly floatingmortgage system in the process of operating, at the same time to balance themortgagor and the mortgagee interests constitute, by introducing the negative pledgeclauses, to a certain degree of limitation on the mortgagor mortgages property in theestablishment of floating mortgage relationship behavior. In the course of the study tothe method of comparative analysis, historical analysis and text analysis method, acomprehensive analysis of the different effect of negative pledge clauses in thefloating mortgage system operating in the process, different effects and third of themortgage and mortgage related parties outside of the function, trying to construct aperfect system of floating charge.In the system of floating charge into the negative pledge clause, can effectivelylimit the mortgagor mortgaged property behavior. The floating mortgage relationshipestablished, based on the characteristics of floating mortgage, mortgage people haveto mortgage property free right, if the mortgagor unlimited to dispose of themortgaged property, the mortgagee may seriously affect the rights of. While thenegative pledge clause introduced by the floating charge is between the two sidesagreed, prohibit or restrict the mortgagor in the establishment of floating mortgagerelationship for others to pledge or other property disposition. Negative pledge clauseare mainly in the form of pure negative pledge clause, clause, peer to peer negativewarranty claim type negative pledge clauses and automatic negative pledge clause.Control effect of the negative pledge clauses of different types are different, purenegative pledge clause, clause, peer to peer negative warranty claim type negative pledge clause because they do not have clear property established security interestpoint and therefore can only produce the validity of the contract between the partiesin the mortgage. Automatic negative pledge clause with clear property orientation, inthe third person is aware of the conditions, namely by the clause.Negative pledge clause in a role to play in the process of trading in differentsubjects have different effect. First of all, between the floating mortgage parties,because the negative pledge clause is the mortgage after the two sides negotiatedsubjective theory, it should be binding on both sides. For the mortgage transactionoutside of the third people, such as executing creditors, fixed chargee and mortgageon the normal business activities of the mortgaged property purchase, whethersubjects were negative pledge clause, should consider the negative pledge clause formand whether to perform effective registration procedures, whether the negative pledgewas not specific to third who knows the existence of the terms.The floating mortgage system in the negative pledge clause after the effective set,if the mortgagor violates the negative pledge clauses agreed to set the security forthird people, floating mortgagee can request the mortgagor to bear the liability forbreach of contract, the floating mortgage into fixed mortgage and other effectivemeasures to safeguard their own interests. Negative pledge clause plays a positiverole in limiting the mortgagor to dispose of the mortgaged property, but the negativepledge clause role is not subject to any restrictions, such as third lien, there existingsecurity interests or the interests of existing security updates and quasi guaranteetransaction, the transaction or behavior or in law, or does not constitute the essence ofthe guarantee, but maintain an action to be charge of day-to-day business, which donot materially affect the floating mortgagee’s benefit, so should not be negativepledge clause restrictions.