Registration of charge with Registrar of Companies (ROC) under Companies Act, 2013

I. CHARGES THAT REQUIRE REGISTRATION IN ROC FOR COMPANIES

Earlier Companies Act, 1956 (“1956 Act”) cast an obligation on the Company to register with ROC only specified charges (these charges were specified 1956 Act itself) and not all charges created on property / undertaking of the Company.

The Companies Act, 2013 (“2013 Act”) on the other hand requires the company to register the particulars of a charge created by it on its property or assets or any of its undertakings with Registrar of Companies (ROC).

The 2013 Act defines ‘charge’ as an interest or lien created on property/ assets/ undertaking of the company as security. In view of this definition of ‘charge’ it appears that even pledges/ lien of moveable property will have to be registered with ROC under the 2013 Act since there are no charges specified in the Act.

II. TIME LIMIT

Charges are required to be registered with the ROC having jurisdiction over Registered Office of the company, under Section 77 of the Companies Act, 2013, within 30 days from the date of its creation.

III. FORMS FOR CREATION OR MODIFICATION OF CHARGE

Charges must be registered with the ROC by filing the particulars in Form No.CHG-1 (earlier Form-8) along with duly verified and certified copies of the documents/records/creating such charges with the requisite fee thereon.

IV. CONDONATION OF DELAY BY ROC

ROC may, on being satisfied that the company had sufficient cause for not filing the particulars and instrument of charge, if any, within a period of thirty days of the date of creation of the charge, allow the registration of the same after thirty days but within a period of three hundred days of the date of such creation of charge or modification of charge on payment of additional fee. [Please check the section “Additional fees” on calculation of additional fees]

Two important aspects which may be noted here:

a.Power of ROC to condone the delay is discretionary and there must be sufficient reason to for not registering the charge with specified period of 30 days.

b. Three hundred days shall be calculated from the date of creation of charge. It means effectively the Act provides for additional 270 days.

The application for delay shall be made in Form No.CHG-1 and supported by a declaration from the company signed by its secretary or director that such belated filing shall not adversely affect rights of any other intervening creditors of the company.

V. CERTIFICATE OF REGISTRATION

Where a charge is registered with ROC, he shall issue a certificate of registration of such charge in Form No.CHG-2.

This certificate holds utmost importance. Please see the section relation to “Effect of non-registration of charge” for more information.

VI. MODIFICATION OF CHARGES

Process for modification of charge is similar to that of creation of charge described above.

VII. SATISFACTION OF CHARGES

A company shall within a period of thirty days from the date of the payment or satisfaction in full of any charge registered under Chapter VI, give intimation of the same to ROC in Form No.CHG-4 along with the fee. ROC shall then issue a certificate of registration of satisfaction of charge in Form No.CHG-5.

VIII. EFFECT OF REGISTRATION OF CHARGE WITH ROC

Where any charge on any property or assets of a company or any of its undertakings is registered under the provisions of Companies Act, 2013, 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.

IX. CONSEQUENCES OF A CHARGE NOT BEING REGISTERED

It specifies that every charge created by a company is required to be registered unless such a charge is registered the charge shall be void against a liquidator or any subsequent charge.

The 1956 Act provided that the no charge created by a company shall be taken into account by the liquidator or any other creditor unless particulars thereof with copy of instrument creating charge have been filed with ROC within 30 days of creation of charge.

The 2013 Act contains more stringent provisions in this regard, i.e. no charge created by a company shall be taken into account by the liquidator or any other creditor unless it is duly registered and a certificate of registration of such charge is given by ROC.

X. PERSONS AUTHORISED TO CREATE CHARGE

It shall be the duty of every company creating a charge to register the particulars of the charge signed by the company and the charge-holder.

If a company fails to register the charge within the period of 30 days, the Charge holder may apply to the ROC for registration of the charge along with the instrument created for the charge. ROC may, on such application, within a period of fourteen days after giving notice to the company, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered, allow such registration of charge. The charge holder in such case shall be entitled to recover from the company the amount of any fees or additional fees paid by him to ROC for the purpose of registration of charge.

XI. Fees payable

As per 2013 Act, applicable fees on CHG-1 correspond to the nominal share capital of the Company in the below manner:

Nominal Share Capital::: Normal fee payable
Less than 1,00,000::: Rs.200/-
1,00,000 to 4,99,999::: Rs.300/-
5,00,000 to 24,99,999::: Rs.400/-
25,00,000 to 99,99,999::: Rs.500/-
1,00,00,000 or more::: Rs.600/-

Additional Fees

Period of delays::: Fee applicable
upto 30 days::: 2 times of normal fees
More than 30 days and upto 60 days::: 4 times of normal fees
More than 60 days and upto 90 days::: 6 times of normal fees
More than 90 days and upto 180 days:: 10 times of normal fees
More than 180 days::: 12 times of normal fees

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