Debenture — Fixed and Floating Charge (Nigeria)

A Debenture — Fixed and Floating Charge in Nigeria sets out the debenture fixed and floating charge and the obligations it places on the parties.

The combined fixed and floating charge debenture is the standard security document required by Nigerian commercial banks — including Guaranty Trust Bank (GTB), Zenith Bank, First Bank of Nigeria, Access Bank, UBA, and others — for significant corporate lending. It gives the lender the maximum available security over the borrowing company's asset base: a fixed charge over the company's high-value or specifically identifiable assets (land, buildings, plant and machinery, intellectual property, investments, and receivables) and a floating charge over the residual assets of the business (inventory, cash, future assets, and the business undertaking as a whole).

The legal foundation for the combined charge debenture in Nigeria is the Companies and Allied Matters Act (CAMA) 2020, Part E, Sections 212-221, which governs the creation, registration, and enforcement of company charges. CAMA 2020 introduced important updates to the charge registration framework compared to the prior CAMA 1990, including the extended 90-day registration window and enhanced CAC register provisions.

In the event of the company's insolvency or administration, fixed charges rank above preferential creditors and floating charges. Under CAMA 2020, preferential creditors (including employees' wages for specified periods and certain tax liabilities) rank ahead of floating charge holders but below fixed charge holders. The priority between competing charges over the same assets is determined by CAMA 2020 and by the common law rules governing priority of interests.

The combined charge debenture is typically accompanied by a facility agreement (the primary loan contract), a legal mortgage over specific real property, personal guarantees from directors or shareholders, and possibly share pledges. Together, these documents form the security package that the lender holds as protection for the credit exposure. A trust deed may also be used where the security is held by a trustee on behalf of multiple lenders in a syndicated facility.

Registration of the combined charge debenture with the Corporate Affairs Commission (CAC) must be completed within 90 days of execution under Section 216 of the Companies and Allied Matters Act 2020 (CAMA 2020). Failure to register within this window renders the charge void against a liquidator, administrator, or other creditors under Section 220 of CAMA 2020 — a consequence that Nigerian courts have consistently enforced. The CAC charge register is publicly searchable, enabling lenders to conduct priority searches before advancing funds. Where the charged assets include land in Lagos State, the Lagos State Land Registry under the Lagos State Land Registration Law 2015 must also be notified; land in the FCT requires registration with the Abuja Geographic Information Systems (AGIS). Governor's consent under Section 22 of the Land Use Act 1978 is a pre-condition for creating a valid legal charge over a right of occupancy. The Stamp Duties Act (Cap S8 LFN 2004) imposes ad valorem stamp duty on debenture instruments, administered by the Federal Inland Revenue Service (FIRS). The Securities and Exchange Commission (SEC Nigeria) under the Investments and Securities Act 2007 regulates debentures issued as public securities on the Nigerian Exchange Group (NGX) or the FMDQ OTC Securities Exchange. The Central Bank of Nigeria (CBN) under BOFIA 2020 supervises banks' security taking and the CBN Prudential Guidelines set minimum documentation standards for charges taken as collateral. The National Industrial Court of Nigeria (NICN) has jurisdiction over employment-related priority claims by employees in debenture enforcement proceedings. In insolvency, the Federal High Court or State High Court oversees winding-up and receivership proceedings under CAMA 2020 Part F, and the Insolvency Rules prescribe the procedure for proving secured creditor claims before a liquidator appointed by the Corporate Affairs Commission (CAC).

The legal framework governing the Debenture — Fixed and Floating Charge (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Debenture — Fixed and Floating Charge (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.

A Nigeria combined Fixed and Floating Charge Debenture is needed whenever a company seeks to provide the maximum available security over its entire asset base to a lender or creditor.

Major commercial bank lending: all significant corporate lending by Nigerian commercial banks involves a combined debenture as the primary security instrument. Banks regulated by the CBN under the Banks and Other Financial Institutions Act (BOFIA) 2020 require thorough security as part of their credit risk management framework and CBN prudential guidelines on credit risk management.

Syndicated lending: where multiple banks provide a syndicated loan facility to a Nigerian company — common in project finance, infrastructure finance, and large corporate lending — a combined debenture is held by a security trustee (typically a law firm, trust company, or the facility agent) on behalf of all lenders in the syndicate.

Development finance institutions: the Bank of Industry (BOI), the Nigerian Export-Import Bank (NEXIM Bank), the Development Bank of Nigeria (DBN), and the Infrastructure Bank of Nigeria require combined debentures as security for development lending programmes.

Capital market debt instruments: Nigerian companies issuing corporate bonds listed on the Nigerian Exchange Group (NGX) or traded on the FMDQ OTC Securities Exchange provide a combined debenture (through a trust deed) as security for the bondholders. The Securities and Exchange Commission Nigeria (SEC) reviews the security package as part of the bond issuance registration process under the Investments and Securities Act (ISA) 2007.

International development finance: the International Finance Corporation (IFC), the African Development Bank (AfDB), the European Investment Bank (EIB), and other multilateral lenders lending to Nigerian companies require a Nigerian law-governed combined debenture as part of the domestic security package.

Private credit: private credit funds, family offices, and alternative lenders providing growth capital or acquisition finance to Nigerian companies require a combined debenture to secure their debt investment.

Parties in Nigeria should prepare a Debenture — Fixed and Floating Charge (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A Nigeria Combined Fixed and Floating Charge Debenture must contain the following essential provisions to create valid, enforceable security.

Parties: the chargor company (with RC number, registered address, and evidence of board authorisation) and the chargee lender or, in syndicated transactions, the security trustee acting on behalf of the lenders. The capacity and authority of each party to enter into the deed must be confirmed.

Secured obligations: a thorough, all-monies clause securing all present and future obligations of the chargor to the chargee — principal, interest, fees, costs, and all other amounts — under the facility agreement and all related finance documents.

Fixed charge assets: a specific schedule identifying each asset subject to the fixed charge, typically including: freehold and leasehold land and buildings (with certificate of occupancy and plot numbers); plant, machinery, and equipment (with serial numbers where possible); intellectual property (registered trademarks, patents, and copyrights); investments and shares in subsidiaries; and specific receivables or assigned contracts.

Floating charge over all assets: a floating charge over all the company's present and future assets, rights, revenues, and undertaking not subject to the fixed charge — described in broad terms to capture the maximum possible asset coverage.

Crystallisation events: express events that cause the floating charge to crystallise into a fixed charge — including: an event of default under the facility agreement; commencement of any insolvency proceedings; appointment of a receiver, liquidator, or administrator; the chargor ceasing to carry on business; and written notice of crystallisation by the chargee.

Negative pledge and covenants: restrictions on creating further charges, disposing of assets, changing business activity, or taking other actions that could impair the security without prior written consent.

Enforcement powers: the chargee's right to appoint a receiver or administrative receiver under CAMA 2020 Section 219; the receiver's powers of management, sale, and application of proceeds; and the power to take possession of the charged assets.

Priority provisions: where the debenture is part of a multi-creditor security package, provisions addressing the priority of the various security interests and the inter-creditor arrangements.

CAC registration: the obligation to register the debenture with the Corporate Affairs Commission within 90 days under CAMA 2020 Section 216, with the consequences of non-registration clearly stated.

Execution as a deed: signed under seal (or by two authorised directors) and witnessed, with board resolutions and corporate authority documentation.

Additional compliance elements for a Debenture — Fixed and Floating Charge (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.