Fixed and Floating Charge (Nigeria)

A Fixed and Floating Charge in Nigeria records the fixed and floating charge and the particulars that give it legal effect.

The legal framework for fixed and floating charges in Nigeria is anchored in the Companies and Allied Matters Act 2020 (CAMA 2020), Part E (Debentures and Charges), particularly Sections 202 to 212. Section 209 of CAMA 2020 requires every charge created by a company (including fixed and floating charges) to be registered with the Corporate Affairs Commission (CAC) within 90 days of creation by filing the prescribed Form CAC-C1 and paying the registration fee. An unregistered charge is void against the liquidator and any creditor of the company under Section 209(3) of CAMA 2020, though it remains valid against the company itself.

The priority of fixed and floating charges in Nigeria follows well-established common law principles confirmed by the Nigerian Supreme Court: a fixed charge has priority over a floating charge over the same asset (even if the floating charge was created first and registered earlier), unless the floating charge contains a negative pledge clause preventing the creation of subsequent fixed charges ranking in priority. A floating charge crystallises — converting into a fixed charge attaching to specific assets — on the occurrence of a crystallisation event defined in the debenture: typically, default on the secured obligation, the chargee's appointment of a receiver under the debenture, or commencement of winding up under CAMA 2020.

A Fixed and Floating Charge executed by a Nigerian company in favour of a bank regulated under the Banks and Other Financial Institutions Act 2020 (BOFIA 2020) must also be registered at the relevant State Land Registry (for real property subject to the fixed charge) and — where the secured loan exceeds certain thresholds — may require CBN credit risk notification under the CBN Credit Risk Management System (CRMS).

The legal framework governing the 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 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 Fixed and Floating Charge in Nigeria is required whenever a company borrower wishes to provide thorough security over its entire business and asset base to a lender as a condition of obtaining credit facilities.

A Fixed and Floating Charge is required when a Nigerian company seeks a term loan, revolving credit facility, or overdraft from a commercial bank regulated by the CBN under BOFIA 2020, and the bank requires a first-ranking debenture over the company's assets as primary security, in addition to any personal guarantees from the directors.

A Fixed and Floating Charge is needed when a Nigerian company issues bonds, commercial paper, or debt securities to institutional investors — including through the Nigerian Exchange Group (NGX) or FMDQ Securities Exchange — and the bond indenture requires the issuer to grant a debenture over its assets to the bond trustee as security for bondholder obligations.

A Fixed and Floating Charge is required when a private equity fund or venture capital investor provides mezzanine debt or subordinated loan financing to a Nigerian portfolio company, with the charge creating a second-ranking security (after senior bank debt) over the company's assets.

A Fixed and Floating Charge is needed in project finance transactions for Nigerian infrastructure, energy, or mining projects governed by the Petroleum Industry Act 2021 (PIA 2021) or the Electricity Act 2023, where project lenders require a debenture over the special purpose vehicle's (SPV's) assets and project contracts as security for the project loan.

A Fixed and Floating Charge is required when a Nigerian company refinances existing secured debt, with the new lender requiring a fresh charge instrument to be created and registered at CAC within 90 days under Section 209 of CAMA 2020, upon discharge of the prior charge.

A Fixed and Floating Charge is needed in a factoring or receivables finance arrangement, where a finance company takes a fixed charge over the company's receivables and book debts as primary security for the facility, together with a floating charge over the remaining undertaking.

Parties in Nigeria should prepare a 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 valid Nigerian Fixed and Floating Charge (Debenture) must contain the following essential elements to create enforceable security and to satisfy CAC registration requirements under CAMA 2020.

Parties: Full legal names, registered addresses, and CAC RC numbers of the chargor (the borrowing company) and the chargee (the lender or security trustee). The chargor must be a company incorporated under CAMA 2020; a fixed and floating charge cannot be granted by an individual or unincorporated entity in the corporate sense (though an individual may create a mortgage or charge over specific assets).

Secured Obligations: A precise definition of all obligations secured by the charge — the principal loan amount in NGN, the applicable interest rate, any default interest rate, fees, charges, costs, and contingent liabilities. The 'all monies' charging clause (securing all present and future obligations of the chargor to the chargee) is common in Nigerian banking practice.

Fixed Charge Assets: A specific description of the assets subject to the fixed charge — real property described by title deed reference, C of O number, state, and LGA; plant and machinery described by type, serial number, and location; intellectual property described by registration number and jurisdiction; and specific book debts or receivables. For land, the fixed charge operates as an equitable mortgage under the Land Use Act 1978 and requires governor's consent under Section 22 for alienation.

Floating Charge — Undertaking Description: A clause creating the floating charge over the chargor's entire undertaking and all its assets and property, both present and future, not otherwise specifically charged, including goodwill, book debts, inventory, cash, and uncalled capital.

Negative Pledge and Restrictions: Covenants prohibiting the chargor from creating any other charge over the assets ranking in priority to or equally with the floating charge, from disposing of fixed charge assets without the chargee's consent, and from incurring additional indebtedness above a specified threshold without the chargee's prior written approval.

Crystallisation Events and Enforcement: A definition of crystallisation events (default, appointment of receiver, winding up) and the chargee's enforcement rights — including appointment of a receiver and manager under Sections 203-208 of CAMA 2020 and power of sale. The receiver's powers, remuneration, and duties should be specified.

CAC Registration: The charge must be registered at CAC within 90 days of creation by filing Form CAC-C1 and the stamped debenture deed. For land subject to the fixed charge, separate registration at the State Land Registry is required.

Additional compliance elements for a 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.