Quick analysis of Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013
The Government of India (Ministry of Corporate Affairs) has announced vide General Circular No. 23/2020 Dated: 17th June, 2020 a Scheme for relaxation of time limit of filing of forms relating to:
1. Creation of charges;
2. Modification of charges
The Scheme has been introduced for the purpose of condoning the delay in filing of charge from in aforementioned event/s. Before proceeding further, it is pertinent to mention that, under the Companies Fresh Start Scheme, 2020 as laid out in the General Circular No. 12/2020, dated 30.03.2020, the benefit of waiver of additional fees was not extended to the charge related documents.
Underlying compliance under Section 77
In accordance with section 77 of the Companies Act, 2013 (hereinafter referred as “Act”) the companies are required to file forms related to creation or modification of changes within the timelines as prescribed therein. The required form shall be filed within total 120 days from the date of creation/modification of charge. In case the company failed to file the form, the charge holder, may file the same in compliance of provisions as stipulated under section 77 of the Act.
1. As per Section 77 (1) form shall be filed within 30 days of creation/modification of charge;
2. As per first proviso to Section 77(1), in case charges created on or after the commencement of the Companies (Amendment) Ordinance, 2019 i.e. 12.01.2019, the relevant form shall be filed within a period of sixty days of such creation/modification;
3. As per second proviso to Section 77(1), the Registrar may, on an application, allow registration of charge to be made within n additional period of sixty days from the period as prescribed in clause (2) above after payment of such advalorem fees, hence total period comes out to be 120 days from the date of creation/modification.
Brief outlines of the Scheme:
Nobody is untouched by the fact that the COVID-19 has caused significant troubles for organizations and entrepreneurs in doing their business exercises around the world. Accordingly, government has been providing various relaxation/extension of time for filing of forms along with other time-based compliance in order to ease out the unprecedented circumstances which were never foreseen by companies.
The Ministry of Corporate Affairs after taking into consideration various representations requesting exemption of timelines related to filing of certain charge forms so as to provide a window of compliances. Accordingly, Central Government in exercise of its powers under section 460 read with section 403 of the Act and the Companies (Registration Offices and Fees) Rules, 2014 (Fees Rules) has announced the Scheme providing relaxation for filing of charge form, without paying additional fees subject to conditions as mentioned therein.
Highlights of Scheme
The Scheme shall be applicable in respect of filing of form No. CHG-1 and Form No. CHG-9 by company or charge holder, as the case may be, where the date of creation /modification is:
1. Before 01.03.2020, however, the timelines for filing as provided under section 77 have not been expired on 01.03.2020, (i.e. period of 120 days from the date of creation/modification of charge has not been expired).
Relaxation- Exclusion of certain period
In above case, the period beginning from 01.03.2020 and ending on 30.09.2020 (the exemption period) shall not be reckoned for the purpose of counting the number of days. Accordingly, if the company does not file the requisite form, the period for counting number of days shall commence from 01.10.2020 excluding the exemption period.
Hence, if the Company does not file the form within the exemption period, 01.10.2020 shall be first day for counting the number of days within which form was required to be filed, subject to conditions mentioned therein.
Relaxation- Exclusion of certain period
In this case, the period beginning from the date of creation/ modification of charge to 30.09.2020 shall not be reckoned for the purpose of counting of days under section 77 or section 78 of the Act.
Accordingly, first day for counting the number of days for the purpose of reckoning 120 days shall commence from 01.10.2020.
Form excluded from the scheme:
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