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Law Charges under companies act, 2013 The “CHARGES” under the
Companies Act 2013 are governed by the Sections 77,78,79,,89 and the
Rules 2014. Relevant forms for charges are CHG-1 to CHG-10 (Totally 10
Forms) WHAT IS A CHARGE: The company may borrow monies by providing
security of its assets and may create a lien on the properties of the
Company. The Company may also issue Debentures to raise funds which
may carry a right/ interest in the Assets/Properties of the company. A
charge is a way of security to the creditor/lender of his interest/right on
the properties of the company for the amounts due to him by the
company. The Companies Act,2013 defines a Charge as an interest or lien
created on the assets or property of a Company or any of its undertaking
as security and includes a mortgage U/s 2(16). In the earlier Act of 1956,
the word “Mortgage” was not mentioned. The Assets stated in the above
definition covers all assets including Goodwill, Patents and All assets
whether situated in India or abroad. KINDS OF CHARGES: The charges are
of two kinds: 1. Fixed Charge: A charge which is identifiable with specific
and clear asset/property at the time of creation of charge. The Company
cannot transfer such identified and defined property unless the charge
holder (creditor) is paid off his dues. 2. Floating Charge : It covers the
floating and circulating nature of properties of a company, like sundry
debtors, stock in trade etc., The nature of the property charged may
change from time to time .The floating charge crystallizes into fixed
charge if the Company crystallizes or the undertaking ceases to be a
going concern. FORMS FOR CHARGES: The relevant sections for CHARGES
under the The Companies Act,2013 are Section 77,78 and 79. The forms
notified for “charges” are CHG-1 to CHG 10. To understand and remember
these forms easily, these can be divided into three categories. 1. FORMS
FOR FILING: CHG-1,CHG-4,CHG-6,CHG-8,CHG-9,CHG-10 2. CERTIFICATES
ISSUED BY ROC: CHG-2,CHG-3,CHG-5 3. REGISTER TO BE MAINTAINED BY
COMPANIES:CHG-7 OBLIGATION OF THE COMPANY TO REGISTER
CHARGE: Whenever such charge is created, the Company shall register
the charges created with the concerned Registrar of Companies. Forms:
CHG-1 is the form to file with ROC ( for all charges other than debentures)
Forms: CHG- 9 (for Debentures including rectification) Time limit: Within
30 days of creation or modification along with fee, duly signed by the
company and charge-holder. Fee : As prescribed in the Companies Act
(Registration Offices and Fees)Rules,2014. EFFECTS OF CHARGE
REGISTRATION: Once charge is registered with ROC, it is a public notice
that the charge holder has interest in the charged property. So no person
can act against the interest of the charge holder. In case of not filing or
delay in charge registration: If charge is not registered at all , the
creditor/lender cannot have hold on security charged. Though the liability
to repay the debt exists on the company to the creditor/lender as per the
Indian Contract Act, the creditor/lender will not have security/priority in
discharging the dues. DELAY IN REGISTRATION: The time limit is 30 days
from the creation of charge to get the same registered with the
concerned ROC. If there is delay beyond 30 days, the particulars of charge
can be filed with the ROC within 300 days of creation/modification but
with additional fee. Form No. CHG-10 along with a duly signed declaration
by the company secretary/director stating that such belated filing shall
not adversely affect rights of any other intervening creditors of the
company. In case of creating or modifying a charge Delay beyond 300
days: CERTIFICATE OF REGISTRATION: CHG-2 is the certificate of
registration issued by ROC on creation of charge.CHG-3 is the certificate
issued on registration of modification of charges. The certificate issued
by ROC is the conclusive evidence of creation of charge. SATISFACTION
OF CHARGE: Within 30 days of payment or satisfaction in full of any
charge registered, the company shall give intimation of the same in CHG-
4 along with fee. Then the ROC shall issue a certificate of registration of
satisfaction of charge in Form no. CHG-5 REGISTER TO BE MAINTAINED
BY COMPANY: The particulars of every charge shall be entered in a
register of charges to be kept at the registered office of the company in
Form No. CHG-7 wherein all particulars of charge shall be entered. Such
entries shall be authenticated by secretary or any person authorized by
the Board for the purpose. Such register shall be open for inspection by
any member or creditor without any fee and by any other person on
payment of fee. I , B Shivaji Prasad, hereby affirm and state that the
above article on “ Charges under Companies Act,2013 is written by me on
my own and it is not published elsewhere so far) Article by : CA.
B.SHIVAJI PRASAD PLOT NO.95, Mandela Park Road, LIC Colony,
Vijayawada-520 008 Recommended Read Income Tax Act – 1961 Sec 14A
disallowance The Insight to Section 197 of The Companies Act 2013 More
» shivaji prasad bhimavarapu on 23 February 2015 113 SHARES
FACEBOOK TWITTER LINKEDIN Published in Corporate Law Views : 17492
Other Articles by - shivaji prasad bhimavarapu Report Abuse Total likes : 4
times ← Previous Next → 3 years ago CA SONIYA AGARWAL Nicely
Compiled Reply 3 years ago shivaji prasad bhimavarapu Thanks.This is
my first article here. Reply 3 years ago santosh manikumar NICE Reply
3 years ago guest fem a Good summary Reply 3 years ago guest fem a
good summary Reply 3 years ago Anilkumar Thanku sir Reply 3 years
ago Arshad A Mohammed Thank you, Sir. A lot of effort has gone into this.
Reply 3 years ago Bharat Precise and to the point. Thanks, please keep
writing. Reply 3 years ago harshi Does pleadge of shares amounts to
creation of charge ? Do we need to file chg 1 for the same? Reply 3
years ago veda vyas Excellent article sir it was very helpful but I have a
query sir what does satisfaction of charge mean and what is the purpose
of it's issue? Reply Show All (20) → Your are not logged in . Please login
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