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As per the Companies Act, 2013, A Charge is an interest or lien created on the assets or property of a Company or any of its undertaking as security and includes a mortgage U/s 2(16). A charge is defined under section 77 to 87 of the Companies Act 2013. In this article, we will discuss the registration & satisfaction of charge;
Table of Contents
For financing their projects, almost all the Companies i.e. big companies and small companies depend upon share capital and borrowed capital. Where the borrowed capital consists of funds raised by issuing –
To secure their loans, the financial institutions/banks do not lend their money unless they are sure that their funds are safe, and they would be repaid as per the agreed repayment schedule. The borrowing company is required to execute the agreements i.e. Loan & hypothecation deed, mortgage deeds, and another similar document, in favor of the lending institutions and banks.
The financial institution resort to
creating the right in the assets and properties of the borrowing companies,
which is known as a charge on assets.
For creating the charge, the company shall register the particulars of the charge with the ROC within 30 days of creating the charge. For registering the charge together with a copy of the instrument, if any, creating or modifying the charge in Form No.CHG-1 or Form No. CHG-9 as the case may be, duly signed by the Company and the charge holder and filed with the Registrar within a period of 30 days of the date of creation of such charge along with the respective fees.
The company shall from the date of
payment in full or satisfaction of any charge registered is required to give
the intimation of the same to the Registrar of the company within 30 days from
date of such payment in Form CHG-4 i.e. Satisfaction of Charge along
with the prescribed fees.
As the satisfaction of charge is the date of complete payment of debt towards which the charge is created on the assets of the company. The documents of satisfaction of charge must contain the amount secured and also the date of completion of payment.
The Registrar in pursuance of Section 82 or 83 of the Companies Act 2013, enters a memorandum of satisfaction of
charge in full and issue a certificate of registration of satisfaction of
charge in Form No. CHG-5.
Note – However, as per the provision
of Section 82(1), the intimation can be filed beyond 30 days but within 300
days of the date of satisfaction with an additional fee.
Section 86 provides for penal provisions for
default which may result in heavy fines or imprisonment.
In case of delay of more than 300 days in filing the satisfaction of charge,
the respective company is left with the only option to move a compounding
application before the Regional Director of the MCA or the person duly authorized
by the MCA on their behalf (Ministry of Corporate Affairs).
As per the
Companies (Registration Offices and Fees) Rules 2014, the filing fees for the satisfaction of the charge are
mentioned below. However, the filing fees depend upon the Nominal Share Capital
of the Company –
In case of delay in non-filing of the
satisfaction of the charge within a period of 30 days from the date of
satisfaction of the charge, the additional fee is required to be paid if filed within
a period of 300 days from the date of payment of satisfaction of the
Form CHG-7 (Register of Charge) to kept at the registered office of the Company i.e. the particulars of the charge i.e registration & satisfaction of charge shall be entered in the register of the charge and shall be authenticated by the Company Secretary of the Company or any other person duly authorized by the Board of directors of the company for this purpose. The register of Charge shall be open for inspection by any member or creditor of the company.
Also, Read: MCA Revised Charge Filing Fees and Timelines.
Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. Also, she has practical experience of almost 1.5 years in Legal compliance and secretarial work.
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