Charge as per section 2(16) of Companies Act, 2013 refers to creation of interest or a right on a property or asset of a company or any of its undertaking as a security and includes mortgage against loan provided to the company in respect of such interest. In the Companies Act, 1956, the word ‘Mortgage‘ was not mentioned.
The word Assets covered in the above definition includes all assets along with
1. Those assets whether situated inside or outside India
2. Tangible or intangible assets
KINDS OF CHARGES
There are two kinds of Charge:
1. Fixed Charge: A Charge is called fixed when it is created to cover assets that are associated and definite or are capable of being ascertained and defined at the time of creating the Charge, e.g, land, building, plant and machinery.
2. Floating Charge: A floating charge is not attached to any definite property but covers property which is fluctuating in nature, e.g, debtors, stock-in-trade.
FORMS AND TIME LIMIT FOR CREATION/ MODIFICATION OF CHARGE
Whenever any charge is created, the Company shall register the charge with the concerned ROC in e-form CHG 1 (other than debentures) and in CHG 9 (for debentures) within 30 days of creation or modification of charge, duly signed by the Company and charge- holder, alongwith normal fee.
Registrar on an application by the Company may allow Company to register the Charge after the above specified period, as below:
1. Charges created before the Commencement of the Companies (Amendment) Ordinance, 2019, within a period of 300 days of such creation, i.e, 270 more days after the expiry of 30 days. If registration still not made within the prescribed time period then, it has to be made within 6 months from the date of commencement of the Companies (Amendment) ordinance, 2019 on payment of additional fees.
2. Charges created on or after the commencement of the Companies (Amendment) Ordinance, 2019 within a period of sixty days of such creation, on payment of such additional fees as may be prescribed, i.e, 30 more days after the expiry of 30 days. If registration still not made within the prescribed time period then an application has to be made to Central Government in form CHG 8 for further 60 days extension, which if approved can be registered by paying advalorem fees.
Once Charge is created and registered a certificate of registration in CHG- 2 (for creation of charge) and in CHG 3 (for modification of charge) is issued by concerned ROC. Register of Charge to be maintained by Company in CHG 7.
N.B: Companies (Amendment) Ordinance, 2019 was promulgated on January 12, 2019.
SATISFACTION OF CHARGE
According to the provisions of section 82 of the Companies Act, 2013, Company shall give intimation to Registrar regarding payment or satisfaction of charge within a period of thirty days from the date of such payment or satisfaction.
FORM REQUIRED TO BE FILED
E-form CHG- 4 is required to be filed with the concerned ROC as soon as No Dues Certificate is received from the Charge holder. After filling CHG 4, Company will thereafter receive Certificate of Registration of Satisfaction of Charge from the Concerned ROC in CHG- 5.
TIME LIMIT FOR FILLING FORM
Satisfaction of Charge is required to be filed with concerned ROC within 30 days from its satisfaction or date of full payment. If not paid within 30 days, then has to file within 300 days (i.e, 270 more days on expiry of 30 days). If still not filed CHG 4, then Company shall first apply for condonation of delay to be made to Regional Director in CHG 8 and only then Satisfaction of charge to be filed. As soon as order is received from RD, has to be intimated to ROC in INC 28.
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Disclaimer: Please note that the above article is based on the interpretation of related laws, which may differ from person to person and is not legal advice. This is only a knowledge sharing initiative.
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What if Loan has already been paid in 18-07-2017 and bank gives the NOC on 18-01-2023 mentioning that loan has already been paid on 18-07-2017.
Can we file CHG-4 at present date without any condonation?