Sections 77 to 87 of the Companies Act, 2013 (“the Act”) govern the creation, modification, satisfaction, and registration of charges. The regime is designed to protect the creditors and the public by ensuring that the charges on the company's assets are publicly recorded.
The Creation and Registration
Section 77 requires a company to register the particulars of every charge created on its property or assets with the ROC within thirty days of the creation of the charge. The registration is made in Form CHG-1, and it must be accompanied by the instrument creating the charge and the prescribed fee.
The charge may be registered within three hundred days of its creation on payment of additional fee. The ROC has the power to condone the delay beyond three hundred days under Section 87, on being satisfied that the company had sufficient cause for the delay.
The Modification
Section 79 requires the company to register any modification in the charge within thirty days of the modification. The modification includes a change in the terms and conditions of the charge, a change in the extent or operation of the charge, or a change in the property charged. The modification is registered in Form CHG-1.
The Satisfaction
Section 82 requires the company to intimate the satisfaction of the charge to the ROC within thirty days of the payment or satisfaction. The intimation is made in Form CHG-4, and it must be accompanied by the evidence of satisfaction.
The Consequences of Non-Registration
A charge that is not registered is void against the liquidator and the creditors of the company. The debt secured by the charge becomes payable immediately, and the charge holder loses the priority that the registration would have given. The company and its officers are also liable to penalty for the failure to register.
The Rectification
Section 87 empowers the Central Government to rectify the register of charges where the omission or misstatement was accidental or due to inadvertence. The application must be made in Form CHG-8, and it must be supported by the evidence of the inadvertence.
Call to Action
Anuj Desai & Associates advises companies and charge holders on the charge registration regime—from the CHG-1 filing and the modification to the satisfaction and the condonation of delay. If your company has created or modified a charge, we can help you ensure that it is properly registered.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
Article 166