Registration of Charge

NOTE ON REGISTRATION OF CHARGE

(Section 77 to 87 of the Companies Act, 2013 and the rules made there under)

REGISTRATION OF CREATION OR MODIFICATION OF CHARGE

It shall be the duty of every company creating or modifying a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating or modifying such Charge in e-Form CHG-1 (For other than Debentures) or e-Form CHG-9 (for Debentures including ratification) along with the fees with the Registrar within 30 days of its creation or modification.

Where the particulars of Creation of charge is registered with the Registrar he shall issue a certificate of registration of such charge in Form CHG-2.

Where the particulars of modification of charge is registered with the Registrar, he shall issue a certificate of modification of charge in Form CHG-3.

CERTIFICATE – A CONCLUSIVE EVIDENCE OF CHARGE

The certificate issued by the Registrar shall be conclusive evidence that the requirements of Chapter VI – Registration of Charge of the Companies Act, 2013 and the rules made there under as to registration of creation or modification of charge have been complied with

NOTE: Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall 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 unless it is duly registered under this Act or previous Act and a certificate of registration of such charge is given by the Registrar under this Act or previous Act.

Nothing, as said above, shall prejudice any contract or obligation for the repayment of the money secured by a charge.

VERIFICATION OF INSTRUMENT OF REGISTRATION OF CHARGE

A copy of every instrument evidencing any creation or modification of charge and required to be filed with the Registrar shall be verified as follows-

a.       where the instrument or deed relates solely to the property situated outside India, the copy shall be verified by a certificate issued either under the seal, if any, of the company or under the hand of any director or company secretary of the company or an authorised officer of the charge holder or under the hand of some person other than the company who is interested in the mortgage or charge;

b.      where the instrument or deed relates, whether wholly or partly, to the property situated in India, the copy shall be verified by a certificate issued under the hand of any director or company secretary of the company or an authorised officer of the charge holder.

APPLICATION BY CHARGE HOLDER FOR REGISTRATION OF CHARGE

If the company fails to register the particulars of the charge with the Registrar within the period of 30 days of its creation or modification, the particulars of the charge together with a copy of the instrument, if any, creating or modifying such charge may be filed by the charge-holder in e-form CHG-1 or e-form CHG-9, as the case may be, duly signed along with fee and the Registrar may, on such application, within a period of 14 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 of charge.

If form is filed by the Charge holder for registration of creation or modification of charge, that person shall be entitled to recover from the company the amount of any fees or additional fees paid by him to the Registrar for the purpose of registration of charge.

REGISTER OF CHARGE BY ROC

The particulars of charges maintained by Registrar of Companies on the Ministry of Corporate Affairs portal (www.mca.gov.in/MCA21) shall be deemed to be the register of charges.

The register shall be open to inspection by any person on payment of fee.

CONDONATION OF DELAY BY REGISTRAR OF COMPANIES (ROC)

The Registrar may, on being satisfied that the company had sufficient cause for not filing the particulars and instrument of charge, if any, within a period of 30 days of the date of creation or modification of the charge, allow the registration of the same after 30 days but within a period of 300 days of the date of such creation of charge or modification of charge on payment of additional fee.

SATISFACTION OF CHARGE

A company shall give intimation in the e-form CHG-4 along with the fee within a period of 30 days from the date of the payment or satisfaction in full of any charge registered.

Where the Registrar enters a memorandum of satisfaction of charge in full, he shall issue a certificate of registration of satisfaction of charge in form CHG-5.

The Registrar shall, on receipt of intimation in e-form CHG-4, cause a notice to be sent to the holder of the charge calling upon him to show cause within such time not exceeding 14 days, as may be specified in such notice, as to why payment or satisfaction in full should not be recorded as intimated to the Registrar, and if no cause is shown, by such holder of the charge, the Registrar shall order that a memorandum of satisfaction shall be entered in the register of charges kept by him and shall inform the company that he has done so.

But, the notice referred above shall not be required to be sent, in case the intimation to the Registrar in this regard is in the e-form CHG-4 and signed by the holder of charge.

In case of Specified International Financial Services Centres (IFSC) Public and Private Company, the Registrar may, on an application by the company, allow such registration to be made within a period of 300 days of such creation on payment of such additional fees as may be prescribed. (Inserted vide Notification Dated 4^th January, 2017).

POWER OF REGISTRAR TO MAKE ENTRIES OF SATISFACTION AND RELEASE IN ABSENCE OF INTIMATION FROM COMPANY

The Registrar may, on evidence being given to his satisfaction with respect to any registered charge,-

a.       That the debt for which the charge was given has been paid or satisfied in whole or in part; or

b.      that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking,

enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of the property or undertaking has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be, notwithstanding the fact that no intimation has been received by him from the company.

The Registrar shall inform the affected parties within 30 days of making the entry in the register of charges kept by him.

INTIMATION OF APPOINTMENT OF RECEIVER OR MANAGER

The notice of appointment or cessation of a receiver of, or of a person to manage, the property, subject to charge, of a company shall be filed with the Registrar in e-form CHG-6 along with fee.

Any person appointed shall, on ceasing to hold such appointment, give to the company and the Registrar a notice to that effect and the Registrar shall register such notice.

REGISTER OF CHARGES TO BE KEPT BY THE COMPANY

Every company shall keep at its registered office a register of charges in Form CHG-7 and enter therein particulars of all the charges registered with the Registrar on any of the property, assets or undertaking of the company and the particulars of any property acquired subject to a charge as well as particulars of any modification of a charge and satisfaction of charge.

The entries in the register of charges maintained by the company shall be made forthwith after the creation, modification or satisfaction of charge, as the case may be.

Entries in the register shall be authenticated by a director or the secretary of the company or any other person authorised by the Board for the purpose.

The register of charges shall be preserved permanently and the instrument creating a charge or modification thereon shall be preserved for a period of 8 years from the date of satisfaction of charge by the company.

The register of charges and instrument of charges shall be open for inspection during business hours-

a.       by any member or creditor without any payment of fees; or

b.      by any other person on payment of such fees as may be prescribed, subject to such reasonable restrictions as the company may, by its articles, impose.

CONDONATION OF DELAY BY CENTRAL GOVERNMENT

(Rectification by Central Government* in Register of Charges)

*(Power of Central Government delegated to Regional Directors vides notification dated 19^th December, 2016)

The Regional Directors on being satisfied that-

(i) (a) the omission to file with the Registrar the particulars of any charge created by a company or any charge subject to which any property has been acquired by a company or any modification of such charge; or

(b) the omission to register any charge within 300 days in case of creation or modification of charge or the omission to give intimation to the Registrar of the payment or the satisfaction of a charge within 30 days of its payment; or

(c) the omission or mis-statement of any particular with respect to any such charge or modification or with respect to any memorandum of satisfaction or other entry made in pursuance of section 82 or section 83 of the Companies Act, 2013,

Was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice the position of creditors or shareholders of the company; or

(ii) On any other grounds, it is just and equitable to grant relief,

it may on the application of the company or any person interested and on such terms and conditions as it may seem to the Regional Directors just and expedient, direct that the time for the filing of the particulars or for the registration of the charge or for the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the omission or mis-statement shall be rectified.

Where the instrument creating or modifying a charge is not filed within a period of 300 days from the date of its creation (including acquisition of a property subject to a charge) or modification and where the satisfaction of the charge is not filed within 30 days from the date on which such payment of satisfaction, the Registrar shall not register the same unless the delay is condoned by the Regional Directors.

The application for Condonation of delay and for such other matters as mentioned above shall be filed with the Regional Directors in Form CHG-8 along with the fee.

The order passed by the Regional Directors shall be required to be filed with the Registrar in Form INC-28 along with the fee as per the conditions stipulated in the said order.

PENALTY

If any company contravenes any provision of the Chapter VI – Registration of Charge and the rules made there under, the company shall be punishable with fine which shall not be less than Rs. 1 Lakh but which may extend to Rs. 10 Lakh and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 6 months or with fine which shall not be less than Rs. 25,000/- but which may extend to Rs. 1 Lakh, or with both.

Contact Details:

VISHAL SHARMA

Company Secretary

Mob: 9716763754

Email: csvishalpbs@gmail.com

Please note that for any query and consultancy Rs. 500/- will be charged.

FOR MORE ARTICLES VISIT TO:

http://csvishalsharma.blogspot.in/

-
Disclaimer: The Content is prepared on the basis of our general understanding and on the basis of relevant provision of Companies Act, 2013 read with rules made there under. The whole content is only for the knowledge sharing purpose, we do not take any responsibility for the correctness of the same.