Valid corporate charge and borrowing capacity upheld where advances relied on prior authorisation and no fraud was shown.

A charge was treated as valid where advances were made on the faith of a prior corporate resolution authorising borrowing on the company's assets, even though the charge deed was executed after the advances were completed. The transaction was not regarded as fraudulent under section 231 of the Companies Act because there was no evidence of intent to defeat creditors or collusive delay to mislead them. The company's capacity to borrow was also upheld, as the Registrar's certificate under section 103(2) was treated as conclusive and creditors were entitled to rely on it without investigating internal non-compliance by directors.

---

---

Issues: (i) Whether the charge created in favour of the lender was a valid security; (ii) Whether the transaction was void as fraudulent under section 231 of the Companies Act; (iii) Whether the company was incompetent to borrow money because of non-payment by a director of money due on application and allotment, despite the Registrar's certificate under section 103(2) of the Companies Act.

Issue (i): Whether the charge created in favour of the lender was a valid security.

Analysis: The advances were made pursuant to a prior resolution authorising borrowing on the security of the company's assets, and the correspondence and oral evidence showed that the lender advanced the money on the strength of that arrangement. The later execution of the charge deed did not undermine the underlying bargain, because the money had been advanced in stages and the deed was executed after the advances were completed.

Conclusion: The charge was held to be valid.

Issue (ii): Whether the transaction was void as fraudulent under section 231 of the Companies Act.

Analysis: No material in the evidence suggested any intent to defeat creditors or any collusive postponement of the deed to preserve credit. The facts were unlike a case where the parties deferred execution to evade the statutory consequences of registration and thereby mislead creditors.

Conclusion: The transaction was not held to be fraudulent and was not void under section 231 of the Companies Act.

Issue (iii): Whether the company was incompetent to borrow money because of non-payment by a director of money due on application and allotment, despite the Registrar's certificate under section 103(2) of the Companies Act.

Analysis: The certificate issued by the Registrar was treated as conclusive evidence that the company was entitled to commence business, and the Court held that the same certification removed any technical bar to borrowing money, since the conditions for commencing business and borrowing were the same. Creditors were entitled to rely on the Registrar's certificate without investigating internal compliance by the directors.

Conclusion: The objection to the company's capacity to borrow money was rejected.

Final Conclusion: The appeal failed, and the order upholding the lender's security stood, with costs awarded against the appellant.

Ratio Decidendi: A charge created after advances have been made is valid where the advances were made on the faith of a prior authorisation to secure the borrowing, and the transaction is not shown to be fraudulent or beyond the company's borrowing competence.

---