Introduction: Understanding the intricacies of charges under the Companies Act 2013 is crucial for corporate compliance. This guide outlines the comprehensive procedure for the registration, modification, and satisfaction of charges, ensuring companies adhere to legal obligations.

MEANING

Section 2(16) of the Companies Act 2013 defines Charge as “an interest or lien created on the property or assets of a Company or any of its undertakings or both as security and includes a mortgage”. The Companies Act further requires all companies to register any Charges created by the Company and maintain a register of it.

PROCEDURE:

The procedure for creation/modification/satisfaction of charge by a company is as follows:

1. Send notice to all the Directors of the company for calling a Board Meeting for the purpose of:

a.Considering the decision for creation/ modification/satisfaction of charge.

b.Authorising a person to execute the required documents and filing an application with the ROC.

2. Conduct a Board meeting and pass the following Board resolution for the purpose mentioned above:

1. In case of creation of charge

“RESOLVED THAT pursuant to the provisions of Section 77, 79 and other applicable provisions, if any, of the Companies Act 2013 read with Rule 3 and 6 of the Companies (Registration of Charges) Rules 2014 including any amendment thereto, the consent of the Board be and is hereby accorded to secure the amount of Rs<Loan amount> with interest at <Interest Rate> per annum obtained by the company from the <Borrower Name and Address> by creating a charge on the company’s immovable property, plant and machinery, cars, vehicles, furniture and fittings and floating charge on the whole of the undertaking and the assets of the company in favour of the <Borrower Name>.

RESOLVED FURTHER THAT Mr…………………., Director of the Company, be and is hereby authorised to sign/execute the necessary documents, papers, writings, and agreements on behalf of the Company as required and take necessary steps to file the required forms with the Registrar of Companies and to do such acts, deeds, and things as are necessary to give effect to the above Resolution.”

2. In case of modification of charge

RESOLVED THAT pursuant to the provisions of Section 77, 79 and other applicable provisions, if any, of the Companies Act 2013 read with Rule 3 and 6 of the Companies (Registration of Charges) Rules 2014 including any amendment thereto, the Company has created a charge in favour of the bank (Name of the Bank with Address) which had advanced a term loan of Rs.________________ (Amount in words) with interest (Rate of interest) against mortgage of (detail of property where the charge is created) and whereas the consent of the Board be and is hereby accorded to modify the said charge on (date of modification) by way of enhancement of the sum so advanced form Rs.___________(existing amount of loan) to Rs._________ (new amount of loan) with an interest rate (new rate of interest) against the mortgage of (detail of property where charge is created) and (detail of other property charged, if any).

RESOLVED FURTHER THAT (Name of the authorized person(s) be and are hereby authorized jointly / individually on behalf of the Company to make intimation, to sign and file the necessary forms, documents, papers, writing as required for modification of earlier charge as modified by the parties with their mutual consent and also to register the same with Registrar of Companies (concerned state) in the connection with the said modification.”

3. In case of satisfaction of charge

RESOLVED THAT pursuant to the provisions of Section 82 and other applicable provisions, if any, of the Companies Act 2013 read with Rules 3 and 6 of the Companies (Registration of Charges) Rules 2014 including any amendment thereto, the consent of the Board be and is hereby accorded for the satisfaction of charge of Rs.<amount> created on <date> having Charge Id <ID>.

 RESOLVED FURTHER THAT Mr…………………., Director of the Company, be and is hereby authorised to sign/execute the necessary documents, papers, writings, and agreements on behalf of the Company as required and take necessary steps to file the required forms with the Registrar of Companies and to do such acts, deeds, and things as are necessary to give effect to the above Resolution.”

3. File E-Form CHG-1 (in case of creation/modification of charge) or CHG-4 (in case of satisfaction of charge) within 30 days from the date of passing of the Board resolution.

4. The ROC shall issue a certificate in form CHG-2 (in case of creation of charge) and form CHG-5 (in case of satisfaction of charge).

PARTICULARS OF CHARGE TO BE FILED

1. Total amount secured by the charge

2. Date and details of the instrument creating charge

3. Name and address of charge holder

4. General description of the property/assets charged

5. Date of resolution authorising creation of charge

6. Terms and conditions of the charge.

FORMS

1. CHG-1 – in case of creation/modification of charge (other than debentures)

2. CHG-9 – in case of creation/modification/satisfaction of charge (for debentures)

3. CHG-4 – in case of satisfaction of charge

ATTACHMENTS

A) In case of creation/modification of charge

1. Instrument creating/modifying charge

2. If a company is acquiring property subject to the charge then the instrument evidencing creation of charge and acquisition of property.

3. If a company has undertaken consortium finance then the particulars of all joint holders

4. Board resolution (optional)

B) In case of satisfaction of charge

1. No dues certificate from the charge holder

2. Board resolution (optional)

MCA NORMAL FEES

1. Fees (In case of an Indian company having share capital)

Nominal Share Capital Fee applicable (INR)
Less than 1,00,000 200
1,00,000 to 4,99,999 300
5,00,000 to 24,99,999 400
25,00,000 to 99,99,999 500
1,00,00,000 or more 600

2. Fees (In case of Indian Company not having a share capital) – INR 200

3. Fees (In case of Foreign Company) – INR 6000

MCA ADDITIONAL FEES

Period of Delay Small Companies and One Person Company Other than Small Companies and One Person Companies
Up to 30 days Three times normal fee Six times normal fee
More than 30 days and up to 90 days In addition to a) and b), an ad valorem fee of 0.025 per cent of the amount secured by the charge, subject to the maximum of INR One lakh In addition to a) and b), an ad valorem fee of 0.05 per cent of the amount secured by the charge, subject to the maximum of INR Five lakhs

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DISCLAIMER:- This Blog is for the purposes of information/knowledge and shall not be treated as solicitation in any manner or for any other purposes whatsoever.

Feel free to contact the author for further clarification at 9953808432 or via mail at cssinghaniaandassociates@gmail.com. The author is the founder of SINGHANIA & ASSOCIATES (Practicing Company Secretaries Firm) based in Delhi.

Author Bio

Qualification: CS
Company: Singhania and Associates
Location: DELHI, Delhi, India
Member Since: 13 Dec 2021 | Total Posts: 34
CS Sonali Singhania is an associate member of the Institute of Company Secretaries and the founder of Singhania & Associates (Practicing Company Secretaries Firm) based in Delhi. I am a competent professional having great post-qualification experience in Corporate Law, Labour law, SEBI, RBI et View Full Profile

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