In finance, a floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of an ambulatory and shifting nature, such as receivables and stock.

The floating charge 'floats' or 'hovers' until the point at which it is converted ("crystallised") into a fixed charge, attached to specific assets of the business. This crystallisation can be triggered by a number of events. In most common law jurisdictions it is an implied term in the security documents creating floating charges that a cessation of the company's right to deal with the assets (including by reason of insolvency proceedings) in the ordinary course of business leads to automatic crystallisation. Additionally, security documents will usually include express terms that a default by the person granting the security will trigger crystallisation.

In most countries floating charges can only be granted by companies. If an individual person or a partnership was to try to grant a floating charge, then in most jurisdictions which recognise floating charges this would be void as a general assignment in bankruptcy.

Floating charges take effect in equity only, and consequently are defeated by a bona fide purchaser for value without notice of any asset covered by them. In practice, as the charger has power to dispose of assets subject to a floating charge, so this is only of consequence in relation to disposals that occur after the charge has crystallised.

The floating charge has been described as "one of equity's most brilliant creations". They are legal devices created entirely by lawyers in private practice; there is no legislation or judicial decision that was the genesis of a floating charge.

In Holroyd v Marshall (1862) 10 HL Cas 191 it was held that equity would recognise a charge over after-acquired property as being effective to create a security interest over that property automatically upon its acquisition. This decision lead to "a further manifestation of the English genius for harnessing the most abstract conceptions to the service of commerce". Documents came to be drafted that purported to grant security over all of the debtor's present and future property, but by contract expressly permitted the debtor to dispose of those assets, free from the charge, until such times as the debtor's business ceased. This charge came to be known as the "floating charge".

The first recorded English case where a floating charge was recognised was Re Panama, New Zealand, and Australian Royal Mail Co (1870) 5 Ch App 318. The Court of Appeal held that the effect of the document was that the secured creditor could not interfere with the running of the business and its dealings with its own assets until the winding up of the company, but the occurrence of that event entitled the secured creditor to realise its security over the assets and to assert its charge in priority to the general body of creditors.

The use of such floating charges increased in popularity and expanded rapidly until, as Lord Walker described it: "The floating charge had become a cuckoo in the nest of corporate insolvency." Criticism of the effect of floating charges grew, until Lord Macnaghten finally proclaimed in Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22: