Not every form of security a Singapore company gives has to be registered with ACRA, but the ones that do are void against a liquidator and creditors if they are missed. The difficulty is that commercial documents rarely announce themselves as “charges”. A share pledge, a cash collateral deed, an assignment of receivables, a supplier’s retention of title clause or a “letter of set-off” may or may not need to be lodged, depending on what it actually does.
This checklist works through the security arrangements Singapore companies most often sign and explains whether each one needs registering under section 131 of the Companies Act 1967. It is part of our series on company charges, alongside our articles on fixed and floating charges and what happens to an unregistered charge.
Two questions decide whether a charge is registrable
- Has the company created a charge? The Companies Act defines “charge” to include a mortgage and any agreement to give or execute a charge or mortgage. The question is whether the company has given someone a security interest over its own property. Arrangements where the company never owns the asset, or where nobody takes security, are not charges at all.
- Is it on the list? Section 131(3) sets out the categories of registrable charge. A charge that falls outside every category does not need to be registered, however valuable the asset.
For charges created on or after 3 January 2016, the categories are:
| Section 131(3) | Charge on |
|---|---|
| (a) | Property securing an issue of debentures |
| (b) and (h) | Uncalled share capital, and calls made but not paid |
| (c) | Shares the company owns in its subsidiary |
| (d) | Goods and other chattels, where the instrument would require registration as a bill of sale if signed by an individual |
| (e) | Land anywhere in the world, or any interest in land, other than a charge for rent or another periodical sum issuing out of land |
| (f) | Book debts, but not negotiable instruments or Government debentures |
| (g) | The undertaking or property of the company, by way of floating charge |
| (i) | A ship or aircraft, or a share in one |
| (j) | Goodwill, patents, trade marks, copyright, registered designs, or licences under any of them |
Category (g) is the catch-all. Any floating charge is registrable whatever it covers, so an “all assets” debenture is always registrable. The borderline questions mostly arise with fixed security over assets that are not on the list.
The checklist
| Arrangement | Registrable with ACRA? | Why |
|---|---|---|
| Bank debenture with fixed and floating charges | Yes | Contains a floating charge (g) and usually charges on land, book debts and intellectual property |
| Mortgage of the company’s property | Yes, and also at the Singapore Land Authority | Charge on land (e). Section 131(9) removes duplicate filings for other assets, but not for land |
| Charge over shares in a subsidiary | Yes | Category (c) |
| Fixed charge over shares in a company that is not a subsidiary, such as a minority investment or listed shares | Generally no | Not within (c) or any other category, unless created as a floating charge |
| Assignment of receivables by way of security | Yes | Charge on book debts (f) |
| Outright sale of receivables to a factor | No, if it is a genuine sale | A true sale is not a charge. But a “sale” with recourse and repurchase terms may be recharacterised as a security assignment |
| Charge over the company’s own bank deposit (cash collateral) | Uncertain; lenders usually register as a precaution | Whether a bank balance is a “book debt” is not settled by the Act; English authority suggests it often is not. If the charge is floating, it is registrable under (g) |
| Charge over equipment, machinery or vehicles | Yes, if created by a written instrument | Usually within (d), the bill of sale category, as a non-possessory charge over chattels |
| Pledge of goods or documents of title delivered to the lender | Generally no | A pledge depends on the lender having possession. It is not a charge created by an instrument requiring registration as a bill of sale |
| Hire purchase or finance lease | No | The finance company owns the asset. The company has not charged its own property |
| Simple retention of title clause in a supplier’s terms | No | The supplier keeps ownership until paid, so the company never owns the goods to charge them |
| Retention of title extended to resale proceeds or manufactured products | Possibly yes | A claim over proceeds or new products can amount to a charge created by the buyer, often over book debts, and fail if unregistered. See our guide to retention of title clauses |
| Lien arising by law, such as a repairer’s lien | No | Not created by the company |
| Contractual shipowner’s lien over sub-freights created on or after 1 October 2018 | No | Excluded by s 131(3AB) |
| Charge over a ship | Yes | Category (i) |
| Interest in aircraft equipment registrable under the International Interests in Aircraft Equipment Act 2009 | No, to that extent | Excluded by s 131(3B) |
| Charge over trade marks, patents, copyright, designs or goodwill | Yes | Category (j) |
| Charge over a bill of exchange or promissory note | Not as a book debt | Negotiable instruments are excluded from (f) by s 131(3A) |
| Personal guarantee from a director | No | A guarantee is a personal promise, not a charge over company property |
| Company charges its assets to secure a loan to its parent or a related company | Yes, if the asset falls within a category | The company has created the charge, even though the debt is someone else’s |
| Negative pledge clause on its own | No | A promise not to grant security is not itself a charge, but it should be described in the particulars of the related charge |
| Contractual set-off, netting or “flawed asset” deposit arrangement | Generally no | These usually operate as contractual rights rather than a charge, but drafting that gives the bank a proprietary interest may change that |
The cases that cause the most problems
Share charges over investments that are not subsidiaries
Investors and holding companies often charge shares in a joint venture or a minority investment. Category (c) covers only shares in a subsidiary, so a fixed charge over other shares is generally not registrable. Lenders’ counsel still sometimes register, either out of caution or because the share charge also contains a floating element. Where there is any doubt, registering is cheap. The ACRA fee for registering a new charge is $60. Being wrong about registrability can cost the security.
Receivables financing
Invoice financing can be structured as a loan secured by an assignment of receivables, which is a registrable charge on book debts, or as an outright sale of the receivables to the financier, which is not a charge. The label in the agreement is not conclusive. Courts look at the substance: features such as full recourse to the company, an obligation to repurchase and the company keeping any surplus point towards a security arrangement. If the arrangement is treated as security and was not registered, it is void against the liquidator.
Cash collateral
Banks often take a charge over a fixed deposit placed with them, and companies give cash collateral to landlords or suppliers. Whether a charge over a bank deposit is a charge on “book debts” within s 131(3)(f) has never been settled by the Act. English authority, which Singapore courts may consider, has treated a bank balance as generally not a book debt. Because the answer is uncertain and the cost of registering is small, many lenders register anyway. A deposit held by a landlord on terms that it remains the tenant’s money, with the landlord entitled to apply it against arrears, raises the same question, so check the drafting.
Supplier retention of title clauses
A simple clause under which the supplier keeps ownership of the goods until paid is not a charge, because the buyer company never owns the goods. Extended clauses that claim the proceeds of resale or products made from the goods are different. The buyer owns those proceeds and products, so, depending on the drafting, the supplier’s claim is likely to operate as a charge created by the buyer. Courts in England have treated such clauses this way, and if the charge falls within a s 131(3) category, usually book debts, it is void against the liquidator if not registered. Our guide to retention of title clauses explains how suppliers try to recover goods when a customer is insolvent.
Charges the company did not create
Two further rules extend the registration duty beyond charges a Singapore company creates itself:
- Property acquired subject to a charge. If the company buys property that is already subject to a charge of a registrable kind, s 133 requires particulars to be lodged within 30 days after the acquisition is completed.
- Foreign companies. A foreign company registered in Singapore must register registrable charges over its property in Singapore, including charges it created before registering here (ss 133 and 141). The Division does not apply to its charges over property outside Singapore.
If it is registrable: lodge it within 30 days
A registrable charge must be lodged on Bizfile within 30 days after creation, extended by 7 days where the instrument is executed outside Singapore. Either the company or any person interested, including the lender, may lodge. After that, the company must keep a copy of the instrument and its own register of charges at the registered office under s 138, and should lodge a statement of satisfaction under s 136 when the debt is repaid. Our guides cover filing the particulars, filing a variation of charge and filing a satisfaction of charge.
Frequently asked questions
Is there any harm in registering something that is not registrable?
Registering does not make an arrangement into a charge, and it does not cure defects in the security itself. But it costs little, it gives public notice, and it protects the lender if a court later decides the arrangement was a registrable charge after all.
Does a director’s personal guarantee need to be registered?
No. A guarantee is not security over company property. If the director also charges personal assets, such as a private property, those are registered under the rules for that asset, not with ACRA as a company charge.
Are hire purchase agreements registered with ACRA?
No. Under hire purchase, the finance company owns the asset until the final payment, so the company has not charged its own property.
Does a charge over an overseas property need to be registered in Singapore?
Yes, if a Singapore company creates it. Category (e) covers land “wherever situate”, and s 131(4) allows the charge to be lodged even if further steps are needed to perfect it under the foreign law.
Who decides whether a charge is registrable?
ACRA does not rule on registrability when you file. If there is a dispute, usually in a liquidation, the court decides. That is why borderline arrangements are usually registered as a precaution.
Official sources: Companies Act 1967, ss 131, 133, 138 and 141, Companies Act 1967, s 4 (definition of charge), ACRA: registering a charge.
Need help deciding whether a security must be registered?
If your company, or you as a director, shareholder or lender, has signed or is about to sign a share charge, cash collateral deed, receivables financing or other security document and needs to know whether it must be lodged with ACRA, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles banking, security and corporate finance work. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
Willie Tan, Raffles Corporate Services