Registration, Modification & Satisfaction of Charges – Forms & Penalty

Summary: The process of registration, modification, and satisfaction of charges is outlined under Section 77 of the Companies Act, 2013. A company must register a charge within 30 days of its creation using Form CHG-1 or CHG-9 (for debentures). If delayed, the company can apply within the next 30 days by paying additional fees, and within 60 days, an ad-valorem fee is applicable. For charges created before November 2, 2018, registration is required within 300 days. If the charge is not registered within 30 days, a condonation of delay can be requested through Form CHG-8. For modification of charges, Form CHG-3 must be submitted, while the satisfaction of charges must be reported within 30 days using Form CHG-4. Delayed satisfaction applications can be made within 300 days with additional fees, and the Registrar of Companies (ROC) will issue a certificate (Form CHG-5). Penalties for non-registration include fines for the company and its officers, and additional/ad-valorem fees are imposed based on company size. Notably, certain banking companies are exempt from these rules. The key forms involved include CHG-1, CHG-2, CHG-3, CHG-4, CHG-5, CHG-6, CHG-7, CHG-8, and CHG-9.

REGISTRATION, MODIFICATION AND SATISFACTION OF CHARGES

1. REGISTRATION OF CHARGES: (Section- 77 of the Companies act, 2013 read with Companies (Registration of charges) Rules, 2014

a. Company shall register the charge within 30 days of creation of charge in Form CHG-1 & Form CHG-9 (Debentures)

b. If fails to do so in 30 days then, within next 30 days = additional fees

c. Next 60 days = ad-valorem fees

d. If charge has been created before the 2^nd November, 2018 then charge has to be created within 300 days of the creation of the charge

e. If application is not made in 30 days of creation of charge then application for condonation of delay has to be made in Form CHG-8

2. CERTIFICATE OF REGISTRATION OF CHARGE = Form CHG-2

3. APPLICATION FOR MODIFICATION OF CHARGE = Form CHG-3

4. SATISFACTION OF CHARGES:

a. Application for registration satisfaction of charge has to be made within 30 days of satisfaction of charge in Form CHG-4

b. If the application for registration of charge is not made within 30 days of satisfaction then the application for the same has to be made within 300 days of satisfaction of charge along with additional fees.

c. Certificate for the satisfaction of charge to be issued by the ROC in the Form CHG-5

• IMPORTANT FORMS:

1. Form CHG-1 = Application for registration of charge

2. Form CHG-2 = Certificate of registration of charge

3. Form CHG-3 = Certificate for modification of charge

4. Form CHG-4 = Application for satisfaction of charge

5. Form CHG-5 = Certificate for satisfaction of charge

6. Form CHG-6 = Intimation for appointment of liquidator

7. Form CHG-7 = Register of charges

8. Form CHG-8 = Application of condonation of delay

9. Form CHG-9 = Application for registration of Debentures

• Rule-3 of Companies (Registration of charges) Rules, 2014 stating that it shall not apply to any charge required to be created or modified by a banking company under section 77 (Duty to register charge) in favour of the Reserve Bank of India when any loan or advance made to it under section 17 (4) (d) of the RBI Act, 1934.
• PENAL CONSEQUENCES FOR NOT REGISTERING THE CHARGE

1. For Company = Rupees 5,00,000/-

2. For officer in default = Rupees 1,00,000/-

3. Additional fees

• • • For small company & OPC = 3 times of normal fees
    • For other company= 6 times of normal fees

4. Ad-valorem fees

• • • For small company & OPC = 025 % of amount of charge
    • For other company = 050 % of amount of charge