Current Affairs · Banking and Charge Creation
In the context of Charge Creation on securities, what is the primary legal difference between a Negative Lien and a Pari-Passu Charge in a consortium lending arrangement?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A Negative Lien must be registered with the ROC, whereas a Pari-Passu charge does not require registration.
- 2Pari-Passu is only applicable to movable assets, while Negative Lien applies to immovable property.
- 3Negative Lien is a mere undertaking not to encumber assets, while Pari-Passu gives equal rights to multiple lenders over the same security.✓
- 4Negative Lien gives the bank the right to sell the assets, while Pari-Passu requires court intervention.
Correct answer
Negative Lien is a mere undertaking not to encumber assets, while Pari-Passu gives equal rights to multiple lenders over the same security.
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