What is 'Floating Charge'? When does it get crystallised?

A 'Floating Charge' is a type of charge that is created on assets or a class of assets which are of fluctuating or changing in nature. The assets which are under floating charge may include raw material, stock-in-trade, debtors, etc. It is a charge created upon a class of assets both present and future. The assets under floating charge keep on changing because the borrowing company is permitted to use them in the ordinary course of business. The buyers of the assets covered under floating charge will get them free of charge. Crystallization of a Floating Charge In the following events, a floating charge will get crystallised or fixed: (i) When the creditor enforces the security due to the breach of terms and conditions of floating charge like there is non-payment of interest or default in repayment of instalments as per the terms of agreement. (ii) When the company ceases to continue its business. (iii) When the borrowing company goes into liquidation. A floating charge remains dormant until it becomes fixed or crystallised. On crystallisation of charge, the security (i.e. raw material, stock-in-trade, etc.) becomes fixed and is available for realization so that borrowed money is repaid.