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Filing of Charge Creation/Modification/Satisfaction
The Filing of Charge Creation, Modification, or Satisfaction refers to the process of registering a company’s charge (security interest) with the Registrar of Companies (ROC) as mandated by the Companies Act, 2013. This ensures that lenders, creditors, and stakeholders are aware of the company’s financial obligations and provides legal recognition of the charges created on the company’s assets.
A charge is a form of security interest created on a company’s assets or properties to secure a loan or borrowing. Filing the charge with the ROC ensures that it is officially recorded and protects the interests of both the lender and the borrower. The filing is required for:
- Creation of Charge : When a company borrows funds secured by its assets.
- Modification of Charge : When the terms of an existing charge are changed.
- Satisfaction of Charge : When the loan or borrowing is repaid, and the charge is released.
Important
1. Legal Compliance : Mandatory under Section 77 of the Companies Act, 2013.
2. Creditor Protection : Ensures the lender’s interest in the company’s assets.
3. Transparency : Keeps stakeholders informed of the company’s financial liabilities.
4. Avoids Penalties : Non-filing attracts fines and legal repercussions.
5. Priority of Claims : Establishes the priority of the lender’s claim in case of default.
Applicability
The requirement for filing a charge applies to
1. Private and Public Companies : All companies creating charges on their assets.
2. Charges on Various Assets : Immovable properties, movable assets, intellectual property, and others.
3. Financial Institutions : Loans, guarantees, or security provided by banks or other financial institutions.
Documents Required
Features
Features & Benefits of Filing of Charge Creation/Modification/Satisfaction
ROC Certification
Prescribed Forms
Legal Record
Time-Bound Compliance
Filing of Charge Creation
Priority of Claims
Penalty for Non-Compliance
Covers Various Assets
Transparency in Borrowings
Protects Creditors
Comparison with Related Services
| Feature | Charge Creation/Modification/Satisfaction | Annual Return Filing | Filing of Financial Statements |
|---|---|---|---|
| Objective | Secure loans with company assets | Report corporate structure | Report financial performance |
| Regulatory Authority | MCA | MCA | MCA |
| Mandatory Filing | Yes | Yes | Yes |
| Applicable Forms | CHG-1, CHG-4, CHG-9 | MGT-7 | AOC-4 |
| Filing Deadline | 30 days | 60 days of AGM | 30 days of AGM |
| Penalty for Non-Compliance | High | High | Moderate |
Frequently Asked Questions
What is a charge under the Companies Act, 2013?
A charge is a security interest created on a company’s assets to secure borrowing or financial obligations.
Who is responsible for filing the charge?
The company is responsible for filing the charge with the ROC within the prescribed timeline.
What happens if the charge is not registered?
The charge becomes invalid against creditors, and the company may face penalties for non-compliance.
Can the filing deadline for a charge be extended?
Yes, the ROC may allow filing with additional fees if the filing is delayed beyond 30 days.
What is Form CHG-1 used for?
Form CHG-1 is used for the creation or modification of charges.
What is Form CHG-4?
Form CHG-4 is used for filing the satisfaction of a charge after the loan or borrowing is repaid.