On The Floating Charge System

The UK first broke the limit of traditional principles of property rights, established the institution of floating charge 100 years ago, satisfied the development of economy, especially the needs of corporation financing. The most outstanding point of floating charge is that the procession of property may not be transfered to the pledgeor, it entitles the pledgee to the right of disposing the property of its own freely in the scope according to law and regulations. Floating charge became the most popular manner of industry and commerce financing for corporations in UK, enhanced the improvement of manner for corporation financing. The continental legal countries had realized the importance of floating charge in booming economy, so Japan established consortium charge which is similar to floating charge.It is well known that our country is in the new century with rapid economical growth, so the improvement of commercial activity, especially international commercial activity, needs more space for financing activities. And international traditions show that floating charge is good for fulfilling this goal. But at the same time, we should pay attention to that as a country with continental legal tradition, establishing floating charge will not only have to face the challenge of the system of real right, but also the theory and principles of real right. So how to eliminate all these drawbacks, keep away corresponding legal and financial risks, is a big theory and practice problem.This paper focuses on Floating Charge, analyzes and discuss the basic theory of floating charge, the obstacles to traditional real right in establishing floating charge in our country, then provides a legal suggestion to the detail design for floating charge. This paper is consisted with three parts:Part One: The basic theory of floating charge. This part refers to the conception,character of floating charge, origin of UK floating charge which came from cases, compares and analyzes the most famous UK,USA floating charge and Japan consortium charge. All of these institutions could be used for reference for our country introducing the system of floating charge.Part Two: The obstacles to the establishment of floating charge in our country. The obstacles herein resulting from the traditional theory of real rights in continental legal countries, are the numerus clause principle,the principle of"one thing, one right",demonstrative principle. Besides, the non-perfect credit system also imposes negative influence on the establishment. Penman came to the conclusion that our country could eliminate the obstacles to floating charge, and establish the floating charge system through the analyse of the applicability of principles of real rights in modern society and the essential characters of floating charge. So we need break the shackles of real rights, set up relevant system such as publication according to the development of floating charge.Part Three: Legislative suggestions for floating charge in our country. In this part, penman combines the legal actuality of our country with the soul of floating charge, tabled a proposal on subject,scope,rights & obligations of parties,effectiveness,publication,order of priority,crystallisation,take-over and relevant system of floating charge, and on the foundation of these suggestions, formed the system of floating charge in our country.