CHARGE- A COMPLETE OVERVIEW
A charge
is stated in Section 2 (16) of the Companies Act, 2013 which
expresses that charge could be –
-an
interest or lien;
-created
on the property or assets of a corporation; and
-any of
its undertakings or both as security and includes a mortgage
NOTE: The financial
institutions/banks do not lend their monies unless they are sure that their
funds are safe and they would be repaid as per agreed repayment schedule along
with payment of interest.
As
consistent with Companies Act, corporations are required to file particulars of
a charge within 30 days of the creation thereof; or else the charge is void
against the liquidators and the creditors of the corporation.
There are
mainly two classes that charges on a corporation fall into:
v Fixed Charges- Charge against a
specific and identifiable property whose identity cannot change throughout the
period of the loan
v Floating Charges – These charges
are not against any specifically identifiable property as well as cover
properties floating or uncertain such as stock-in trades, debtors etc.
Section
77: Registration of Charges
A company
creating charge, shall, register the particulars of the said charge with the
RoC within 30 days of its creation.
This
charge could be Fixed or Floating:
Ø On its property or assets or
Ø Any of its undertakings
Ø Whether tangible or otherwise:-
ü Situated in or outside India
ü Signed by both the Company and
the charge-holder
ü Together with the instruments
creating the charge
COMMENT:
PROVIDED ALSO THAT ANY SUBSEQUENT REGISTRATION OF A CHARGE SHALL NOT
PREJUDICE ANY RIGHT ACQUIRED IN RESPECT OF ANY PROPERTY BEFORE THE CHARGE IS
ACTUALLY REGISTERED.
PROVIDED ALSO THAT THIS
SECTION SHALL NOT APPLY TO SUCH CHARGES AS MAY BE PRESCRIBED IN
CONSULTATION WITH THE RESERVE BANK OF INDIA.
Charge
may be Registered by company or charge holder
After Companies
(Amendment) Ordinance, 2018:-
CHARGE
CREATED/MODIFIED BEFORE ORDINANCE
·
If Charge is CREATED BEFORE DATE OF
ORDINANCE i.e. 02.11.2018 in such case filling shall be according to
new provisions or old provisions?
Explanation:
ü
As per
Act before ordinance or after ordinance both states that company shall file
form for registration of charge within 30 days of creation in E Form
CHG-1 or CHG-9 for debenture.
ü
In case
company fails to file the same within 30 days of Registration and date of
creation of charge is before 02.11.2018 in that case:
ü
Provided that the Registrar may, on an application by the company, allow such
registration to be made within a period of three hundred days of such creation
on payment of such additional fees as may be prescribed.
ü
Provided further that if the registration is not made within the
period specified i.e. 300 (30+270) days from such creation
then the registration of the charge shall be made within six months from the
date of commencement of the Companies (Amendment) Ordinance, 2018 on payment of
such additional fees as may be prescribed and different fees may be prescribed
for different classes of companies
|
Stage
|
Particulars
|
Time Period
|
Days
|
Fees
|
|
1
|
Registration
of Charge with
ROC |
Within
30 days of creation
|
0+30 = 30 Days
|
Normal Fees
|
|
2
|
If
fails to file within 30 days
|
Within
a period of 300 days of such
creation |
30+270= 300 Days
|
Normal Fees
+ Additional Fees |
Note: within 300 days or 6 months
from creation, whichever is earlier from ordinance date i.e. 2nd
Nov, 2018.
> If
Charge is created after date of Ordinance i.e. 02.11.2018 in such case what
shall be time period for filing of form for registration of charge with ROC.
If charge
is created after 02.11.2018 in such case following
shall be period for filing of charge form with ROC.
|
Stage
|
Particulars
|
Time Period
|
Days
|
Fees
|
|
1
|
Registration
of Charge with
ROC |
Within
30 days of creation
|
0+30 = 30 Days
|
Normal Fees
|
|
2
|
If
fails to file within 30 days
|
Within
a period of 60 days of such
creation |
30+30 = 60 Days
|
Normal Fees
+ Additional Fees |
|
3
|
If
fails to file within 60 days
|
Registrar
may, on an application made by the Company, allow such registration to be
made within a further period of 60 days
|
30 +30 + 60 = 120 Days
|
Normal Fees
+ Additional Fees + ADVALOREM FEES* |
|
After Ordinance i.e. 02.11.2018 Clause Relating To Condonation of
Delay In Creation/ Modification Of Charge Has Been Removed From Section 87.
|
||||
*ADVALORAM
FEES: – 0.05 % of total value of charge to be register.
Section:
78 Charge Holder may register Charge:
Company
fails to register a charge in 30 days → Charge Holder may make application
↓
To ROC in
CHG-1/CHG-9
↓ Within
14 Days
On
Satisfactory reply Roc allows registration → Roc issue Notice (SCN) to company
Provided that where registration is
effected on application of the person in whose favour the charge is created,
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.
Section: 79
Section 77 to Apply in Certain Matters
The provisions of section 77 relating to registration of
charges shall, so far as may be, apply to—
o
a company acquiring any property subject to a
charge within the meaning of that section; or
o
any modification in the terms or conditions or the
extent or operation of any charge registered under that section.
Section: 80
Date of Notice of Charge
Where any charge on any property or assets of a company or any of its
undertakings is registered under section 77, any person acquiring such
property, assets, undertakings or part thereof or any share or interest therein
shall be deemed to have notice of the charge from the date of such
registration.
Section: 81
Register of Charges to be kept by Registrar
81. (1) The Registrar shall, in respect of every
company, keep a register containing particulars of the charges registered under
this Chapter in such form and in such manner as may be prescribed.
COMMENT: REGISTER
OF CHARGES TO BE KEPT BY THE REGISTRAR
v
THE PARTICULARS OF CHARGES MAINTAINED ON THE
MINISTRY OF CORPORATE AFFAIRS PORTAL (WWW.MCA.GOV.IN/MCA21)SHALL BE DEEMED TO
BE THE REGISTER OF CHARGES FOR THE PURPOSES OF SECTION 81 OF THE ACT.
v THE
REGISTER SHALL BE OPEN TO INSPECTION BY ANY PERSON ON PAYMENT OF FEE.
(2) A register kept in pursuance of this section
shall be open to inspection by any person on payment of such fees as may be
prescribed for each inspection.
Section:
82
If charge is satisfied even before or after
02.11.2018 in such case following shall be period for filing of e-form
CHG-4 for satisfaction of charge with ROC.
Table Stating facts in relation to satisfaction of
charge;
|
STAGE
|
PARTICULARS
|
TIME PERIOD
|
DAYS
|
FEES
|
|
1
|
Satisfaction
of Charge with
ROC |
Within
30 days of Satisfaction in E Form CHG-4
|
0+30 = 30 Days
|
Normal Fees
|
|
2
|
If
fails to file within 30 days
|
Within
a period of 300 days of such Satisfaction
|
30+270 = 300 Days
|
Normal Fees + Additional Fees
|
|
3
|
If
fails to file within 300
days |
Filing
of form with RD for satisfaction of Charge in E Form
CHG-8
|
30+270+∞∞= ∞∞
|
Normal Fees +Additional Fees +
CONDONATION FEES |
|
Provisions For Condonation Of Delay In Satisfaction Of Charge Is Still
There In Act Even After Ordinance.
|
||||
NOTE:
v A COMPANY OR CHARGE HOLDER SHALL WITHIN A PERIOD OF THREE HUNDRED DAYS
FROM THE DATE OF THE PAYMENT OR SATISFACTION IN FULL OF ANY CHARGE REGISTERED
UNDER CHAPTER VI, GIVE INTIMATION OF THE SAME TO THE REGISTRAR IN FORM
NO.CHG-4 ALONG WITH THE FEE.
v WHERE THE REGISTRAR ENTERS A MEMORANDUM OF SATISFACTION OF CHARGE IN
FULL IN PURSUANCE OF SECTION 82 OR 83, HE SHALL ISSUE A
CERTIFICATE OF REGISTRATION OF SATISFACTION OF CHARGE IN FORM NO.CHG-5.
Section:
83
(1)
The Registrar may, on evidence being given to his satisfaction with respect to any registered charge,—
o
that the
debt for which the charge was given has been paid or satisfied in whole or in part; or
o
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.
(2)
The Registrar shall inform the affected parties within 30 days of making the entry in the register of charges
kept under sub-section (1) of section 81.
Section:
84
If a
person appoints or obtains an order for the appointment of a Receiver to manage
property then notice of the same is to be given to company as well ROC.
DETAILS REQUIRED
v Charge ID (only in case of
modification of charge)
v Nature, description and brief
particulars of the instrument(s) creating or modifying the charge
v Whether charge is created or
modified within India or outside
v Type of charge (more than one
option can be selected)
v Details of charge holder(s)
ü Category
ü Name
ü Address
ü Email-ID
ü PAN
v Amount secured by the charge as
per instrument of charge
v Brief particulars of the
principal terms and conditions and extent and operation of the charge
ü Rate of Interest
ü Repayment term (in months)
ü Terms of Repayment
ü Nature of facility
ü Date of Disbursement
ü Margin
ü Extent and operation of the
charge
v Short particulars of the property
or asset(s) charged
DOCUMENTS REQUIRED
Following are the attachments to be attached in the
respective form
·
Instrument(s)
of creation or modification of charge i.e. Sanction letter and Loan Agreement
·
Particulars
of all joint charge holders(If any)
PROCEDURE
v Fill all the details in the form
mentioned above along with the attachments
v Get the form digitally signed
from Directors and thereafter attach DSC of the Charge Holder as declaration,
and Practicing professional for verification.
v File form CHG-1 to Registrar of
Companies.
v Thereafter the registrar will
issue a certificate of registration of such charge in Form No.CHG-2 (Creation)
and From No. CHG-3 (modification), as the case may be.
Section:
85
Every
company shall keep at its registered office a register of charges in E Form
CHG-7 and open for inspection in business hours for any members and creditors
without payment or by any other person on payment of such fees as may be
prescribed,
COMMENT:
Provided that a copy of the instrument creating the
charge shall also be kept at the registered office of the company along with
the register of charges.
the register of charges and instrument of charges,
kept under sub-section (1) 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.
Section:
86
Punishment for contravention of provisions related
to charge Under Companies Act, 2013
(1)
Company shall be punishable with 1,00,000<fine<10,00,000
Every
officer
6
MONTHS<imprisonment
25,000
< fine < 1,00,000
NOTE: If any person wilfully furnishes any false or incorrect
information or knowingly suppresses any material information, required to be
registered in accordance with the provisions of section 77, he shall be liable
for action under section 447.
Section:
87
Rectification
by Central Government in Register of Charges
The
Central Government (R.D.) on being satisfied that —
(a) The
omission to give intimation to the Registrar of the payment or
satisfaction (NOT CREATION) of a charge, within the time required
under this Chapter; or
(b) the
omission or misstatement of any particulars, in any filing previously made to
the Registrar with respect to any such charge or modification thereof or with
respect to any memorandum of satisfaction or other entry made in pursuance
of section 82 or section 83, 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, it may,
on the application of the company or any person interested and on such terms
and conditions as it deems just and expedient, direct that the time for the
giving of intimation of payment or satisfaction shall be extended or, as the
case may require, that the omission or misstatement shall be rectified.
DISCLAIMER: THE
ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING
AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT
AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING
INITIATIVE.
THE AUTHOR
– CS DEEPAK SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND
CAN BE REACHED AT CONTACTHHPRO@GMAIL.COM OR 9910248911.
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