When running a business, if businesses are short of capital and when there is a need to improve growth and increase liquidity, the best way is to borrow money from financial institutions or banks that hold their protection as collateral. In this situation, payments are generated by a mortgage on the company's assets to secure loans or debentures. The process for the registration of charges is set out in sections 77 to 87 of the Companies Act 2013.
Any company which creates or modifies a charge on its land, properties, or undertakings, whether tangible or intangible, situated within or outside India, shall, within 30 days of such creation, register a charge specification with the Registrar by applying Form No. CHG-1 (for non-debenture companies) and Type No. For CHG-9 (for debentures).
In addition to Form CHG-1 or CHG-9, as the case may be, documents are filed, such as a certified true copy of any instrument evidencing the formation or alteration of the Fee, in particular of other Charge holders in the case of joint Charge and consortium financing, and in the case of the acquisition of properties already subject to the Charge instrument evidencing such acquisitions.
In compliance with the Annex B of Companies (Registration Offices and Fees) Rules, 2014, payment of fees may be made online. Once the Charge has been registered, the Registrar shall issue a registration certificate for the Charge in Form No. CHG-2 and if the Charge Modification Information is registered with the Registrar, the Registrar shall issue a Charge Modification Certificate on Form No. To CHG-3.
If the information relating to the charge is not reported with the registrar within the specified duration of 30 days, the extension of time can be requested by filing Form CHG-1 and followed by a company declaration signed by its secretary or director that such late filing does not adversely affect the rights of any of the company's other intervening creditors. In the event of a charge created before the start of the Companies (Amendment) Ordinance 2019 within a period of 300 days and on or after the start of the Companies (Amendment) Ordinance 2019 within a period of 60 days following the payment of additional fees as prescribed, the application for extension shall be permitted. The company shall inform the Registrar of Companies within a period of 30 days by means of Form CHG-4 together with the fee as prescribed in Annex B of the Companies (Registration Offices and Fees) Rules, 2014. The Registrar shall enter the Charge Satisfaction Memorandum and issue a certificate of Charge Satisfaction Registration on Form No. To CHG-5.
Furthermore, changes in the creation, modification, or satisfaction of charges shall be incorporated by the company into a form no. CHG-7 in the Charges Register maintained by the company.
Non-registration of the fees with the Registrar of Companies shall not invalidate the created fee, but the liquidator appointed under the Companies Act, 2013 or the Insolvency and Bankruptcy Code, 2016 on the liquidation of the company and the lender shall not take account of the same. This does not, however, prejudice any agreement or obligation to repay the money secured by the charge.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.
