Summary of Charge as Per Companies Act 2013 1

SUMMARY OF CHARGE AS PER COMPANIES ACT, 2013 

Charge means an interest or lien created on the properly or assets of a comp company any or any of its its unde undert rtak akin ings gs or both both as secu securi rity ty and and incl includ udes es a

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mortgage. Charge can be Fixed or Floating. Charge created on a specific assets is called Fixed charge. Charge Charge created not on a specific property but on a block of property whose

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value keeps on fluctuating is called Floating charge. For eg – Stock in trade. tr ade. Conversion of Floating charge into Fixed charge is called crystallisation of 

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charge.  Charge can be created on – i) Movable roperty ii ) !mmovable r roperty iii) iii) !nte !ntelle llect ctua uall rop roper erty ty"" whi which ch can can be be pres presen entt or fut futur ure e prop proper erty ty..  #hen a charge is being created in !ndia or $utside !ndia on the property% asset% undertaking of the company whether tangible or intangible situated in 

!ndia or $utside !ndia then such charge is re&uired to be registered with 'oC For registration of charge the particulars of charge together with a copy of  instrument" if any" need to be filed with 'oC in Form CHG – 1 (for 1 (for other than debentures) and Form CHG – 9 (for 9 (for debentures) within * days of creation or 

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modification of charge duly signed by company and charge holder. !f company fails to file Form C+, – - and Form C+, –  within * days of  creati creation on or modifi modificat cation ion then then RoC shall a right to provide condonation of  dela delay y afte afterr * day days but but with within in ** ** day days from from the the date date of crea creati tion on or  modi modifi fica catio tion n of char charge ge on pay payment ment of addi additi tion onal al fees fees and and on suff!"n# suff!"n#

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!$us"% For availing or making application for condonation of delay with 'oC Form CHG – 10 along 10 along with a &"!'$r$#on need &"!'$r$#on need to be provided by the company that such delayed filing shall not adversely affect the rights of the creditors and

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such declaration need to be signed by CS% /irector of the company. !f company fails to file Form C+, – - and Form C+, –  within ** days of  creation or modification then condonation of delay need to be provided by C"n#r$' Go("rnm"n#)CG*. Go("rnm"n#)CG*. For claiming condonation of delay from C, Form CHG – + is re&uired to be filed along with the suff!"n# !$us". !$us". 0he condonation order issued by the C, is re&uired to be filed with 'oC in Form INC – 2+ along with the specified fees.

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!f a company fails to register the charge within specified time" then the Charge holder (person in whose favour charge being created) shall also have

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a right to file Form C+, – - and Form C+, – . $n receipt of the above application 'oC shall forward same to the company. 0he company may either register the charge itself or specify the reason why

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charge has not been registered. !f the company fails to register the charge" then 'oC shall register the charge

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within 1* days after giving notice to the company. $n filing of Form C+, – - and Form C+, –  'oC will allow such

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registration and shall issue the following certificates2 i) Form CHG – 2 ( Certificate for registration of creation of charge) ii) Form CHG – 3 ( Certificate for registration of modification of charge) No#" T-" !"r#f!$#" ssu". / RoC s-$'' /" $ !on!'us(" "(."n!" #-$# $'' #-" r"ur"m"n# for #-" r"s#r$#on of !r"$#on mo.f!$#on of  

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!-$r" -$s /""n .u' !om4'".% 0he re&uirements for registration of charge shall also apply upon – i) Company ac&uiring property which is sub3ect to charge. ii) Modification of charge (Modification in terms of original charge registered). #hen company makes the entire repayment on any charge amount then such company need to inform 'oC about such satisfaction of charge by filing Form

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CHG – 5 within * days of satisfaction of charge. !f Form C+, – 1 is not filed within * days of satisfaction of charge then

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application for condonation of delay need to made to C,. $n receipt of Form C+, – 1 'oC shall issue a notice to the charge holder  re&uiring the charge holder to submit their representation within -1 days as to

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why such satisfaction of charge should not be registered. $n receipt of such notice if the charge holder2 i) Submit their representation within -1 days then 'oC will forward such ii)

representation to the company. !f fails to submit their representation within -1 days then 'oC will register satisfaction of charge. No#" If Form CHG – 5 -$(" /""n f'". 6#- RoC $'on 6#- $n $!7no6'"."m"n# $!!"4#$n!" ("n / #-" !-$r" -o'."r #-"n

$for"s$. !on.#on s-$'' no# $44'% $n filing of Form C+, – 1 once 'oC being satisfied" 'oC shall issue a Certificate of registration of satisfaction of charge in Form CHG – 8. !f any person appoint any receiver % manager to manage the charge property by virtue of an order or pursuant to the agreement then intimation of such 2

appointment need to be given to 'oC by filing Form CHG –  within * days of appointment. Similarly for cessation of receiver Form C+, – 4 is re&uired to be filed with 'oC within * days of cessation. !f a charge is not being registered then following are conse&uences of non2

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registration2 * Such charge will become void for creditor and li&uidator. * 0he borrower need to make payment immediately. 'egister of charge need to maintained by company in Form C+, – 5 and

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shall also be maintained by 'oC in chronological order. 'egister of charge shall be available for inspection by any person on payment of prescribed fees.

'egards PARASH

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