The Ministry of Corporate Affairs (MCA) has introduced a new scheme vide General Circular No. 23/2020 for relaxing the time for filing of e-Form CHG-1 / CHG-9 for creation or modification of Charges beyond 120 days of such creation or modification.
Background
As per the provisions of Section 77 of the Companies Act, 2013 (Act), every charge created or modified whether in India / outside India has to registered within 30 days of its creation or modification. Whereas, the Companies (Amendment) Ordinance, 2019 allowed further 30 days period on payment of such additional fees as may be prescribed and registrar may allow further 60 days on payment of such additional fees plus Advalorem Fees.
In short, Section 77 allows a total of 120 days for registration of creation or modification with Registrar of Companies on payment of such additional fees plus Advalorem Fees. After 120 days, no charge can be registered.
The Ministry on account of COVID-19 Pandemic and in the view of current market situations had issued General Circular 11/2020 on March 24, 2020 and also issued Companies Fresh Start Scheme, 2020 vide General Circular No. 12/2020 dated March 30, 2020 relaxing the additional fees applicable on various forms to be filed with Registrar and condoning the delay in filing of forms up to September 30, 2020. However, the said benefits were not extended to the Charge related forms.
Therefore, the MCA has come up with this circular introducing a new Scheme namely, “Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013” for the purpose of condoning the delay of filing certain forms related to creation / modification of charges.
Glimpse of the Scheme
| Effective Date of Scheme | June 17, 2020 |
| Effective up to | September 30, 2020 |
| Forms at which Scheme applicable | e-Form CHG -1 and CHG- 9 |
| Applicability | On abovementioned forms where the date of creation / modification of Charge is:
Before March 01, 2020, and the period of 120 is not lapsed OR Any date falls between 01.03.2020 to 30.09.2020 |
Detailed Analysis on Applicability of Scheme
The said scheme is applicable only to two e-Forms i.e. e-Form CHG-1 and e-Form CHG-9 to be filed by the Company / charge holder where the date of creation / modification of Charge is:-
Case I: Before 01.03.2020, but the timeline for filing said forms had not expired under Section 77 of the Act as on 01.03.2020
If the Charge is created / modified before March 01, 2020 and the period of 120 days [30 days + 30 days + 60 days] had not expired on March 01, 2020.
For Example: If a Charge is created / modified on January 09, 2020 and e-Form CHG -1 / CHG- 9 is not filed till the effective date of Scheme is liable to take benefits of the Scheme. In Short, any Charge created / modified on or after November 02, 2019 shall be eligible for this Scheme.
Case II: Falls on any date between 01.03.2020 to 30.09.02020 (both dates inclusive)
If the Charge is created / modified after March 01, 2020 but before September 30, 2020, e-Form CHG-1 / CHG-9 to be filed is liable to take benefits of this scheme.
Detailed Analysis on Relaxation of Time
Case I: The Charge is created before 01.03.2020 and period of 120 days has not expired:
1. The period between 01.03.2020 to 30.09.2020 shall not be reckoned for the purpose of counting the number of days of default u/s 77 or 78 of the Act;
2. If the applicable Form is not filed till 30.09.2020, then the First day after 29.02.2020 shall be 01.10.2020 for the purpose of counting the number of days of default u/s 77 or 78 of the Act.[For Example: if the Charge is created / modified on January 09, 2020 and the benefit of this scheme is not availed by the Company/ Charge holder then the Number of days of default shall be 07.02.2020 to 29.02.2020 and 01.10.2020 till the date of filing of Form.]
Case II: The Charge is created b/w 01.03.2020 to 30.09.02020
1. The period beginning from the date of creation of Charge till 30.09.2020 shall not be reckoned for the purpose of counting the number of days of default u/s 77 or 78 of the Act.
2. If the applicable Form is not filed till 30.09.2020, then the First day shall be 01.10.2020 for the purpose of counting the number of days of default u/s 77 or 78 of the Act.[For Example: if the Charge is created / modified on March 09, 2020 and the benefit of this scheme is not availed by the Company/ Charge holder then the Number of days of default shall be 01.10.2020 till the date of filing of Form.]
Detailed Analysis on Statutory Fee Applicable
Case I: The Charge is created before 01.03.2020 and period of 120 days has not expired:
| If the e-Form CHG-1 / CHG- 9 is filed on or before 30.09.2020 | Statutory fee payable as on 29.02.2020 |
| If the e-Form CHG-1 / CHG- 9 is filed after 30.09.2020 | Statutory fee payable as on 29.02.2020
Plus Fee charged after adding the number of days from 01.10.2020 till the date of filing |
Case II: The Charge is created b/w 01.03.2020 to 30.09.02020
| If the e-Form CHG-1 / CHG- 9 is filed on or before 30.09.2020 | Normal Fees under Fee Rules |
| If the e-Form CHG-1 / CHG- 9 is filed after 30.09.2020 | Fee shall be charged on the basis of number of days of delay beginning from 01.10.2020 till the date of filing |
Exclusion of the Scheme
1. E-Form CHG -1 / CHG-9 already filed before the date of Circular and pending for approval ;
2. E-Form CHG -1 / CHG-9 on which the period of 120 days [30 days + 30 days+ 60 days] has been lapsed as on 01.03.2020;
3. E-Form CHG -1 / CHG-9 filed after 30.09.2020.
P.S.: This Scheme is not applicable to the form related to Satisfaction of Charge i.e. in e-Form CHG-4.
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