Charge Creation & Modification Compliances
In the corporate world, businesses often secure funding by creating a charge on their assets in favour of lenders. Whether it’s a loan from a bank, a financial institution, or the issuance of debentures, the creation and subsequent modification of such charges necessitate strict adherence to the Companies Act, 2013, and timely filings with the Ministry of Corporate Affairs (MCA). At Account Assure, we specialize in navigating these complex compliances, ensuring your charge-related filings are accurate, timely, and legally sound.
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What is a Charge and Why is its Registration Important?
As per the Companies Act, 2013, a “charge” means an interest or lien created on the property or assets of a company or any of its undertakings as security, and includes a mortgage. In simpler terms, when a company borrows money against its assets (like land, machinery, stock, or even intangible assets), a charge is created in favour of the lender.
Registration of Charges under Companies Act, 2013
A company creating a charge on its property situated within India or outside India shall register its charge with the Registrar within 30 days of creation or modification (in terms and conditions) of such charge along with particulars of Charge and a copy of instrument creating the charge signed by the Company and Charge-Holder in such Form specified below:
- CHG-1: – For other than Debentures.
- CHG-9: – For Debentures.
- CHG-7: – Register of Charge (only to be maintained by company for its members).
Failure to register Charge by Company
Charge holder may apply to registrar for Creation/Modification of charge on failure of the company to register the charge within 30 days with the registrar. The Registrar on such application of Charge holder give notice to the company for providing the reason for such delay in registration and shall within 14 days of sending such notice register the charge. The Charge holder is entitled to receive the fees paid by him on application for registration of charge with the Registrar from the Company.
Certificate of Registration for Creation or Modification of Charges
- For Creation of Charge the registrar shall issue certificate as per Form CHG-2.
- For Modification of Charge the registrar shall issue certificate as per Form CHG-3.
How Account Assure Ensures Your Charge Compliances are Flawless
As your trusted Financial Audit Firm, Account Assure provides specialized and comprehensive support for all your charge-related compliances:
Thorough Assessment
We analyze your loan agreements, debenture documents, and other financial instruments to determine the nature of the charge and the exact filing requirements.
Documentation & Information Gathering
Guidance on collecting all necessary documents, including instrument creating/modifying the charge, sanction letters, board resolutions, and consent from charge holders.
Accurate Form Preparation
Expert preparation of e-forms (CHG-1, CHG-4, CHG-9) ensuring all particulars are correctly entered as per MCA guidelines.
Timely Filing
Ensuring the prompt online submission of forms to the MCA within the stipulated deadlines to avoid additional fees and penalties.
Liaison with Authorities
Proactive follow-up with the ROC to ensure smooth processing and approval of your charge filings.
Condonation of Delay (if required)
In cases of delayed filings, we assist in preparing and submitting applications for condonation of delay (Form CHG-8) to the Central Government.
Post-Filing Verification
- Ensuring the receipt of Certificates of Registration of Charge (CHG-2), Modification (CHG-3), or Satisfaction (CHG-5) from the ROC.
- Guidance on maintaining the company’s internal Register of Charges (CHG-7).
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