REGISTRATION, MODIFICATION, AND SATISFACTION OF CHARGES

UNDER THE COMPANIES ACT, 2013

The registration, modification, and satisfaction of charges are governed by Section 77 of the Companies Act, 2013, read with the Companies (Registration of Charges) Rules, 2014. These provisions ensure proper documentation and transparency in financial dealings involving a company's assets.

1. REGISTRATION OF CHARGES

(a) Statutory Requirement

• As per Section 77, every company creating a charge must register it with the Registrar of Companies (ROC) within 30 days of the creation of the charge.

• The application for registration must be filed in Form CHG-1 for general charges or Form CHG-9 for charges created for debentures.

(b) Delay in Registration

• If the charge is not registered within the initial 30 days, it can still be registered:

  • Within the next 30 days with an additional fee.

  • Within the subsequent 60 days with an ad-valorem fee.

• Charges created before November 2, 2018, can be registered within 300 days from the creation of the charge.

• Beyond these timelines, the company must apply for condonation of delay in Form CHG-8.

(c) Certificate of Registration

• Upon successful registration, the ROC will issue a Certificate of Registration of Charge in Form CHG-2.

2. MODIFICATION OF CHARGES

• If any modification is made to an existing charge, the company must file an application in Form CHG-3.

• The same time limits and fee structures for registration apply to modification.

3. SATISFACTION OF CHARGES

(a) Application for Satisfaction

• After a charge is fully satisfied, the company must file an application for its registration within 30 days in Form CHG-4.

• If the application is not made within the stipulated time, it can still be filed within 300 days along with an additional fee.

(b) Certificate of Satisfaction

• The ROC will issue a Certificate for Satisfaction of Charge in Form CHG-5 upon successful registration.

4. IMPORTANT FORMS

1. Form CHG-1: Application for registration of charge.

2. Form CHG-2: Certificate of registration of charge.

3. Form CHG-3: Certificate for modification of charge.

4. Form CHG-4: Application for satisfaction of charge.

5. Form CHG-5: Certificate for satisfaction of charge.

6. Form CHG-6: Intimation for the appointment of a liquidator.

7. Form CHG-7: Register of charges.

8. Form CHG-8: Application for condonation of delay.

9. Form CHG-9: Application for registration of charges related to debentures.

5. EXEMPTIONS

• Rule 3 of the Companies (Registration of Charges) Rules, 2014, provides exemptions for banking companies:

  • Charges required to be created or modified in favor of the Reserve Bank of India (RBI) under Section 17(4)(d) of the RBI Act, 1934, are excluded from registration requirements.

6. PENAL CONSEQUENCES

Failure to register charges can attract severe penalties:

(a) For the Company

• Fine up to Rs 5,00,000/-.

(b) For the Officer in Default

• Fine up to Rs 1,00,000/-.

(c) Additional Fees

• For Small Companies and One Person Companies (OPCs): 3 times the normal fees.

• For Other Companies: 6 times the normal fees.

(d) Ad-Valorem Fees

• For Small Companies and OPCs: 0.025% of the amount of the charge.

• For Other Companies: 0.050% of the amount of the charge.

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Article Compiled by:-

~Neel Lakhtariya

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.