This article deals with registration of creation/modification/satisfaction of charge with registrar of companies under Companies Act, 2013. The registrar is required to maintain a register of charges in respect of every company which is open to public for inspection on payment of prescribed fee.
Companies Act, 2013: Section 77 to 87.
Corresponding provisions under Companies Act, 1956: Section 125 to 145.
Notified on: 1st April 2014
Applicability: All types of companies
As per sec 2(16) “charge” means 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.
Sec 77 imposes a duty primarily on the company creating charge, to register the particulars of charge with ROC. It says that, the company creating a charge
to register the particulars of the charge signed by the company and the charge-holder together with the instruments with Registrar.
Sec 78 gives power to charge holder to apply to Registrar for registration of the charge along with the instrument where the company fails to register the same U/s 77(1). On such application, within a period of fourteen days after giving notice to the company, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered, allow such registration on payment of such fees, as may be prescribed. In such case charge holder is entitled to recover the expenses from the company.
The particulars of charge shall be filed in e-Form CHG-1 (for other than Debentures) or e-Form No.CHG-9 (for debentures including rectification). The form shall be duly signed by the company and the charge holder.
Duly filled and signed e-Form CHG-1 or CHG-9 as the case may be, shall be filed with ROC within a period of 30 days of the date of creation of charge along with the fee.
The particulars of a charge may be filed after the expiry of 30 days of the date of creation but within a period of 300 days of the date of such creation, with the prescribed additional fees. In such case an application for delay shall be made in Form No.CHG-10 and supported by a declaration from the company signed by its secretary or director that such belated filing shall not adversely affect rights of any other intervening creditors of the company. Any delay beyond 300 days in registration of charge, requires prior permission of Central Govt. U/s 87 which is discussed hereinafter.
Any subsequent registration of a charge shall not prejudice any right acquired in respect of any property before the charge is actually registered.
Sec 79 says that the provisions of section 77 relating to registration of charges shall, mutatis mutandies, apply to-
(a) a company acquiring any property subject to a charge within the meaning of that section; or
(b) any modification in the terms or conditions or the extent or operation of any charge registered under that section.
A company shall give intimation to Registrar in e-form CHG-4, of the payment or satisfaction in full of any charge registered under this Chapter within a period of 30 days from the date of such payment or satisfaction.
The Registrar may, on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of 300 days of such payment or satisfaction on payment of prescribed additional fees.
(power is delegated to Regional Director):
If the particulars creation/modification/satisfaction of charge is not filed within the period of 300 days, as mentioned above, only the Central Govt. has power to condone such delay. An application for condonation of delay u/s 87 shall be filed with the Central Government in Form No.CHG-8 along with the prescribed fee. The order passed by the Central Government u/s 87 shall be required to be filed with the Registrar in e-Form No. INC-28 along with the fee as per the conditions stipulated in the said order. (Chapter 6 Rule 12)
Upon registration of creation / modification / satisfaction of the charge under the provisions of this Act, the registrar will issue:
The certificates issued by registrar are the conclusive evidence that the requirements of the Act and rules made thereunder as to registration of creation or modification of charge have been complied with.
The charge not registered u/s 77, shall not be taken into account by the liquidator appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the case may be or any other creditor at the time of winding up of company. However, when the company is a going concern, it shall be liable under instrument creating charge, even though the charge is not registered.
Every company is required to maintain at registered office of the company:
The register of charges and instrument of charges shall be open for inspection during business hours by:
Contravention by a company – punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees.
Officer in default – punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
For any query / information / suggestion, please write at [email protected]
(Nivedita Nikam, Practicing Company Secretary)