Nowadays it is very common if not essential for many companies to obtain a loan in order to grow their businesses. However, these companies, or other usually affiliated entities, will invariably need to provide a form of security to the lender for the securing of the repayment of their obligations. This article wishes to summarise the concept of charges under Cyprus law, especially in the form of fixed and floating charges.


A charge is a security interest created in or over an asset or assets by their owner (the chargor) in favor of a creditor (the chargee), by which it is agreed that that property shall be appropriated to discharge of a debt or other obligation. There is no transfer of title. The chargee’s rights are proprietary, although created by contract, and may be enforced, in case of default, by the sale of the property, if necessary by court order or occasionally by the transfer of the asset(s) to the chargee or affiliated entity; in practice however most security documents expressly empower the chargee to sell the property for this purpose without recourse to the court.
Fixed charges
All charges are either fixed or floating. A fixed charge (or ‘specific’ charge) is a charge secured on identified property, e.g. land and buildings, a ship, piece of machinery, shares, intellectual property such as trademarks, patents, copyrights etc. The fixed charge restricts the chargor’s power to dispose of, or otherwise deal with, the property without the creditor’s consent. It is not essential that the property should be at present owned by the chargor: future property may be the subject of an agreement to provide a charge, provided that it is adequately described so that it is identifiable when acquired. The effect of such an agreement, if for sufficient consideration, is that a charge is deemed to come into existence as soon as the property is acquired by the chargor.

Floating charges

A floating charge is a particular type of security, available currently only to companies. Under a floating charge the property affected must be identifiable. Floating charge is an equitable charge on all or part of the company’s assets and usually the chargor will be free to deal with the charged property in the ordinary course of business without reference and or recourse to the charge, although certain actions may require the consent of the chargee in order to protect the chargee’s interests. The floating charge thus allows a company to give security over assets and at the same time to conduct its business. 

The importance of the floating charge lies in the fact that, for many businesses, fluctuating assets such as stock-in-trade, raw materials and book debts may form an important part of the property of the chargor, and may be the only valuable security available for an advance. Indeed, the proprietors of an unincorporated business which is in need of finance may find themselves obliged to form a company if they are to advance the loans they are seeking: hence the capacity to grant a floating charge can be a significant consideration in deciding whether or not to trade in the corporate form. Banks, in particular, have wide experience of the floating charge and encourage its use by their clients however, may require other security from the directors and may want their personal guarantees.

Our firm has the knowledge and expertise to advice on straight forward and complex transactions from the chargor’s and/or the chargee’s perspective and are happy to discuss any questions or queries you may have on this matter. For further information contact Mr Stephanos Evangelides, Advocate, Director Legal Services on or Ms Christiana Antoniou, Advocate, Manager – Corporate Department on


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