Sign in / Sign Up      
POST YOUR REQUIREMENTS Close

FAQ


Corporate’s require funds for business purposes. A portion of funds are sourced by them and a portion of funds may be borrowed from banks and financial institutions in the form of Working capital or Term loan. The borrowings are secured by way of charge on the movable & immovable properties of the company. A Charge denotes the security on the assets given to ensure the repayment of the loan and sometimes is a pre-requisite conditions imposed by the lender to avail the said facility. Charges can be created on the present or future assets of the company. Here are a few FAQs on charges.

Some FAQ’s on charges:

S.No.

Query

Reply

1.

What is a charge ?

As per Section 2(16) of Companies Act, 2013, “Charge means an interest or lien created on the property or assets of the Company or both as security and includes a mortgage”.

2.

What type of charges can to be registered?

Section 77 states that Companies are required to register all types of Charges:

within or outside India,

on its property or assets or any of its undertakings,

whether tangible or otherwise, and

situated in or outside India

with ROC within 30 days of its creation.

3.

What are the charges specifically that shall be registered with the Registrar of Companies?

(a) a charge created to secure any issue of debentures or deposits;

(b) a charge on uncalled share capital of a company,

(c) a charge on any immovable property, wherever situate, or any interest therein;

 (d) a charge on any book debts of the company;

(e) a charge, not being a pledge, on any immovable property, situate, or any interest therein;

(f) a floating charge on the undertaking or any property of a company including stock-in-trade;

(g) a charge on calls made but not paid;

(h) a charge on a ship or aircraft or any share in a ship or aircraft;

(i) a charge on intangible assets, including goodwill, patent a licence under a patent, trade mark, copyright or a licence under a copyright

4.

What is the procedure for Registration of creation or modification of charge?

Particulars of the charge together with a copy of the instrument, if any, creating or modifying the charge in Form No.CHG-1 (for other than Debentures), duly signed by the company and the charge holder shall be filed with the Registrar within a period of thirty days of the date of creation or modification of charge along with the fee.

5.

What is the procedure for Registration of creation or modification of charge in case of debentures?

Charge particulars duly signed by the Company and the charge holder with copy of instrument of charge for creation or modification shall be filed with Registrar in Form CHG-9 (for debentures including rectification) within a period of 30 days from the date of creation/ modification of charge.

6.


What is the procedure if the Company fails to register the particulars of charge with the Registrar?

If, the Company fails register the particulars of charge with the Registrar within the period of 30 days of its creation or modification, the charge holder can file the particulars of charge in Form No.CHG-1 or Form No.CHG-9, as the case may be, duly signed along with fee.

7.

What is the proof of registration of charge?

The Registrar shall issue a certificate of registration in form CHG-2 or form CHG-3 as the case may be, when the charge is registered .

This certificate issued shall be conclusive evidence that all rules are compiled

8.

What happens in case of delay in filing the particulars of creation or modification of charge beyond 30 days?

The Registrar on being satisfied that the company had sufficient cause for not filling the particulars of charge with in thirty days, allow such registration within three hundred days of creation of charge by paying additional fees. This is referred to as condonation of delay by the Registrar.

9.

What is the procedure to apply for condonation?

The application for condonation shall be made in form CHG-10 and supported by a declaration by the secretary or director of the company that delay shall not affect the rights of creditors.

10.

How can one view the particulars of charges?

The particulars of charge can be viewed in the MCA portal and it  shall be deemed to be register of charges and shall be open to inspection by any person.

11.

What is the procedure for satisfaction of charge?

A company shall within a period of thirty days from the date of the payment or satisfaction in full of any charge, give intimation of the same to the Registrar in Form No.CHG-4 along with the fee.

12.

What is the proof of satisfaction of charge?

The Registrar shall issue the Certificate of satisfaction of charge in Form CHG-5.

13.

What happens in case of delay in filing the particulars of satisfaction of charge beyond 30 days?

The Registrar on being satisfied that the company had sufficient cause for not filling the particulars of satisfaction of charge with in thirty days, allow such registration within three hundred days of satisfaction of charge by paying additional fees.

14.

What are the consequences for non-filing of charge with the Registrar of Companies (ROC)?

No charge created by the company will be taken into account by the liquidator or any other creditor unless it is duly registered with the ROC and a certificate of registration id given by the ROC.

Company and Officers of the company who are in default will be penalized with fine or imprisonment.

If the borrower fails to file particulars of charge on the assets of the company, then such charge will not be taken into account by the liquidator or any other creditor. However, such non-filing will not affect the security interest of the lender. In other words, the security is enforceable by the lender against the borrower, so long as the borrower does not go into liquidation.

15.

What are the registers to be maintained by the Company with regard to charges?

Register of charges is to be maintained in Form CHG-7 by every company at its registered office, in which all charges of the company are kept. Entries therein shall be made forthwith after the creation/ modification/satisfaction.

16.

Is the Register of charges to be signed?

Entries in the said register are to be authenticated by Director or Secretary of the company or any person authorized by the board. Register is to be maintained and preserved permanently.

17.

What is Condonation of delay by Central Government?

The Registrar shall not register the instrument creating/ modifying/satisfying charge, if the same is filed after 300 days of its creation/ modification.

Registrar shall register the same only if condoned by Central Government.

18.

What is the procedure for applying for Condonation of delay to Central Government?

Application for condonation shall be made in form CHG-8. Order passed by the central government shall be submitted with the registrar in Form INC 28 as per the conditions stipulated in the said order.

19.

What are the penaltities imposed?

Penalty:
on the company - for non-compliance with the provisions of this chapter shall not be less than Rs. 1 Lakh which may extend to Rs. 10 Lakh and

on the officer in default - imprisonment which can extend to 6 months or fine not less than Rs. 25,000 which can extend to Rs. 1 Lakh, or with both.


Forms involved in Charges:

S. No

Form No

Event

1.

CHG- 1

Application for registration of Creation or modification of charge
(other than those related to debentures) including particulars of modification of charge by Asset Reconstruction Company in terms of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI)

2.

CHG-2

The Registrar shall issue a certificate of registration of charge

3.

CHG-3

The Registrar shall issue a certificate of modification of charge

4.

CHG-4

Particulars for satisfaction of charge to the Registrar.

5.

CHG-5

Registrar to issue a certificate of registration of satisfaction of charge

6.

CHG-6

Notice of appointment or cessation of a receiver of or of a person to manage the property subject to charge

7.

CHG-7

Particulars of all charges of the Company registered with the Registrar

8.

CHG-8

Application to Central Government for not filing the instruments creating or modifying the charge including satisfaction of charge within 300 days or for rectification of omission or misstatement of particulars in respect of any creation/modification/satisfaction of charge.

9.

CHG-9

Application for registration of creation or modification of charge for  Debentures or rectification of particulars filed in respect of creation or modification of charge for debentures.

10.

CHG-10

Application for delay in filing of Form CHG-1


Need Instant help
Contact Us
+91-9043003883