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MCA Revised Charge Filing Fees and Timelines

Narendra Kumar

| Updated: Aug 20, 2019 | Category: MCA Notification

MCA Revisits Timelines and Fees for Charge Filing

Ministry of Corporate Affairs (MCA) issued a notification on 30th April 2019 amending the Charge filing fees for registration of “Charge Created” and “Charge Modified”. MCA has notified Companies (Registration Offices and Fees) Third Amendment Rules, 2019. Earlier on 2nd November 2018, MCA also issued certain amendments on the provisions relating to charge, i.e., section 77, 86 and 87 of Companies Act, 2013.

Charge Filing as per Companies Act, 2013

A charge is defined under Section 2(16) of Companies Act, 2013. It means an Interest or lien created on the property or assets of a Company or any of its undertaking or both, as a security and includes a mortgage. In case of creation of charge, it needs to get registered and it is the duty of every Company creating charge should get it registered with Registrar within 30 days of creation. In case of delay over 30 days, Registrar may allow getting it registered within three hundred days by the payment of additional fees.

Need of Creating Charge On Company’s Assets

Every large and small Company need funds to carry on its operations and day to day activities, thus the companies rely on share capital or borrowed funds to meet their needs of financing their projects. Borrowed capital consists of funds raised by issuing debentures, either secured debentures or unsecured debentures. Companies also obtain financial assistance from Financial Institutions or Banks.

Financial Institutions lend the money only after getting assured about being repaid in full along with all the interest. Banks make sure their funds are safe and they would be repaid as per agreement. Thus to secure their loans, Banks creates rights in the Assets & Properties of the borrowing companies. Such a creation of rights is termed as the charge on the assets. Such charge on the assets is created as per loan agreements, hypothecation agreements, mortgage deeds, etc, which is executed by Borrowing Companies in the favor of lending Institutions or banks.

Suggested Read: Creation of Charge in India

Timeline and Fees for Creation/Modification Of Charge

Normal Fee Structure

Normal Government fees for filing registration of charge vary as per the Nominal Share Capital of the company:

Share Capital Fees Applicable
Less than Rs. 1,00,000/- Rs. 200/-
Rs. 1,00,000/- to Rs. 5,00,000/- Rs. 300/
Rs. 5,00,000/- to Rs. 25,00,000/- Rs. 400/
Rs. 25,00,000/- to Rs. 1,00,00,000/- Rs. 500/
More than Rs. 1,00,00,000/- Rs. 600/

Charge Created or Modified before 2nd November 2018

  • It is necessary to get the charge registered within 30 days of its creation or modification.
  • Registrar may on application allow for such registration within 300 days of such creation or modification with additional fees.
  • Earlier there has to be filed “Condonation of delay” in case of registration of charge is beyond 300 days. But with this amendment, if the registration is not filed even within 300 days, the Company shall have the time of 6 months from 2nd November 2018 after paying ad valorem fees.
  • Following ad valorem fees are paid depending upon the period of delay:
  • Delay up to 30 days: 2 times of normal fees
  • Delay of more than 30 days but up to 60 days: 4 times of normal fees
  • Delay of more than 60 days but up to 90 days: 6 times of normal fees
  • Delay of more than 90 days but up to 180 days: 10 times of normal fees
  • Delay of more than 180 days: 12 times of normal fees
  • Illustrative Explanation in tabular format: Paid Up Share Capital is assumed to be more than Rs. 1,00,00,000/-
  • Date of creation of charge: 1st August 2018
  • Delay up to 30 days till 30 August: No additional fees
  • Delay from 31 to 300 days i.e., 31st August to 26th May: Additional fee as per the table below
Period of Delay Due Date of Filing Charge   Additional / AD VALOREM Fees
Up to 30 Days 29th September 2018
2 times of normal fees: 1200
More than 30 but up to 60 days 30th September to 29th October 4 times of normal fees: 2400
More than 60 days but up to 90 days 30th October to 28th November 6 times of normal fees: 3600
More than 90 days but up to 180 days 29th November to 26th February 2019 10 times of normal fees: 6000
More than 180 days till 300 days 27th February 2019 to 26th May 2019. 12 times of normal fees: 7200

Thus the company cannot file after 26th May 2019 as it can be filed within 6 months from the commencement of Companies (Amendment) Act, 2019, i.e., 6 months from 2nd November 2018.

The charge created or modified after 2nd November 2018.

  • It is the duty of every Company creating or modifying charge to register it with the registrar within 30 days of its creation in e-form CHG-1.
  • Registrar may on an application made by the Company allow to file such registration within 60 days of such creation/modification on payment of such additional fees.
  • If the registration is not made even within 60 days, such a charge can be registered by the payment of ad valorem or additional fees.
  • Following ad valorem fees are paid depending upon the period of delay:
  • Delay up to 30 days: 2 times of normal fees
  • Delay of more than 30 days but up to 60 days: 4 times of normal fees
  • Delay of more than 60 days but up to 90 days: 6 times of normal fees
  • Illustrative Explanation in tabular format: Paid Up Share Capital is assumed to be more than Rs. 1,00,00,000/-.
  • Date of creation of charge: 1st January 2019
  • Delay up to 30 days till 30 January: No additional fees
  • Delay from 31 to 60 days i.e., 31st January to 1st March: Additional + Ad valorem  fee
  • Delay from 60 to 120 days i.e., 2nd March to 30 April: Additional + Ad valorem  fee

Thus the company will be able to file till 30th April 2019 on the payment of following additional fees:

Period of Delay Due Date of Filing Charge Additional / AD VALOREM Fees
Up to 30 Days 31st January to 1st March 2 times of normal fees: 1200
More than 30 but up to 60 days 2nd March to 31st March 4 times of normal fees: 2400
More than 60 days but up to 90 days 1st April to 30th April 6 times of normal fees: 3600

Additional / AD VALOREM Fees

The following additional fees are applicable and shall be payable with effect from 1st August 2019:

  • If the period of delay is up to 30 days:
  • Small or OPC: 3 times of normal fees
  • Other than small or OPC: 6 times of normal fees
  • If the period of delay is more than 30 days but up to 90 days:
  • Small or OPC: 3 times of normal fees plus an additional fee of 0.025% of the amount secured: maximum of Rupees One Lakhs.
  • Other than small or OPC: 6 times of normal fees plus an additional fee of 0.05% of the amount secured: maximum of Rupees One Lakhs.

FAQs

Is there is any requirement to apply for the registrar for condonation of delay in case of delay beyond 300 days?

No, the application is now not required to be filed with the registrar to condone the delay for omission to file the form for creation or modification of charge.

Who has to file the registration of creation or modification of charge?

It shall be the duty of every company creating a charge on its asset to file for the registration in form CHG-1 or CHG-9 within 30 days.

What is the filing fee for CHG-1 in the case of a company is a foreign company?

Filing fees for registration of creation or modification of Charge by the foreign company is Rs. 6000/- per charge.

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Narendra Kumar

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