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e-form CHG-1 [Application for registration of creation and modification of charge (other than those related to debentures) including particulars of modification of charge by Asset Reconstruction Company]

e-Form CHG-1 is required to be filed pursuant to Section 77, 78 and 79 and Section 384 and Rule 3 of The Companies (Registration of Charges) Rules, 2014

Evaluation of e-form CHG-1

Sr. No.

Particulars

Detail information

1.

SECTIONS OF THE COMPANIES ACT, 2013

  • Section 77:
  • Section 78:
  • Section 79:
  • Section 384:
  • Rule 3:

Mandatory Registration of Charge

Companies creating or modifying a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, are required to register the particulars of the charge. It is the duty of the Company to register the Charge within 30 days of creation.

Failure to register by company- action to be taken by Charge holder

In case Company fails to register charge within 30 days as prescribed under section 77, the person in whose favour the charge is created, (i.e. charge holder), may apply to Registrar for registration of charge. On such application, within a period of 14 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.

Applicability of Registration to other matters

The provisions of section 77 relating to registration of charges shall, so far as may be, apply to:

(a) a company acquiring any property subject to a charge within the meaning of that section; or

(b) Any modification in the terms or conditions or the extent or operation of any charge registered under that section.

Applicability to Foreign Companies

The provisions of Chapter VI (Registration of Charges) shall apply mutatis mutandis to charges on properties which are created or acquired by any foreign company. However, if any exemption is provided to companies established in SEZ and IFSC, then the same exemption shall be applicable to the foreign company.

Form to be filed for Registration:

For instruments other than Debentures- CHG-1 for Debentures- CHG-9

If the property is situated outside India, the instrument creating the charge shall be verified by a certificate issued under the seal of the company, by:

Director or CS of the Company

Authorised Officer of the Chargeholder; or

Some person other than the company who is interested in the mortgage or charge ;

2.

Timeline:

  • Within 30 days of Creation of Charge.

In case of delay:

  • Registration is allowed within next 30 days on payment of additional fees;
  • Registration is allowed within further 60 days on payment of such additional fees plus *Advalorem Fees.

(i.e. total period of 120 days is provided with additional fees plus advalorem fees for registration of creation & modification of Charge)

3.

Contents of the Form

Below are the details required to be filed in the form:

  1. Date of the instrument creating or modifying the charge;
  2. Nature, description and brief particulars of instrument(s) creating or modifying the Charge;
  3. Charge ID (in case of modification);
  4. Whether charge is created or modified within India or outside India;
  5. Whether charge is modified in favour of ARC or assignee;
  6. Type of charge(Multiple options can be selected)
  7. Whether consortium finance is involved, whether joint charge is involved, number of charge holder
  8. Details of charge holder:
  • Category ;
  • Name;
  • Address;
  • Email-ID;
  • PAN.
  1. Amount secured by the charge as per instrument of charge;
  2. Brief particulars of the principal terms and conditions and extent and operation of the charge:
  • Rate of Interest
  • Repayment term (in months)
  • Terms of repayment
  • Nature of facility
  • Date of disbursement
  • Margin
  • Extent and operation of the charge
  1. Short particulars of the property or asset(s) charged.
  2. Whether any of the property or interest therein under reference is not registered in the name of the Company;
  3. Date of creation/last modification prior to present modification.

4.

Attachments

  • Instrument of creation or modification of charge (i.e. Sanction Letter of Bank , loan agreement, Hypothecation Deed);
  • Particulars of all joint charge holders. It is mandatory if the number of charge holders is more than one.
  • Declaration from the Company stating that such belated filing shall not adversely affect the rights of any of the creditors of the Company, signed by CS or Director (to be attached in case of delay in filing of form) (Format of declaration is attached).

5.

Remarks

  • If form is not filed within the prescribed time limit of 120 days (as mentioned above) no registration of charges is allowed.
  • The charge not registered under Section 77, shall not be taken into account by the liquidator appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the case may be or any other creditor at the time of winding up of the company.

6..

Penal Provisions

  • Penalty provisions are provided in section 86:
  • Section 86(1): If any company is in default in complying with any of the provisions of this Chapter, (ie Chapter VI) the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
  • Section 86(2): if any person wilfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of Section 77, he shall be liable for action under section 447.
 

Advalorem Fees

The following advalorem fees as the case may be, shall be payable:

Period of delay

Small Companies and One Person Company

Other than Small Companies and One Person Company

Up to 30 days

3 times normal fee

6 times normal fee

More than 30 days and up to 90 days

3 times of normal fees plus an ad valorem fee of 0.025 per cent. of the amount secured by the charge, subject to the maximum of rupees one lakh.

6 times of normal fees, plus an ad valorem fee of 0.05 per cent. of the amount secured by the charge, subject to the maximum of rupees five lakhs.

 

Note: The form will be auto approved (STP).

Declaration as per the Rule 4(2) of the Companies (Registration of Charges) Rules, 2014

To Whomsoever It may concern

We, the undersigned Directors of [Name of the Company] hereby confirm and declare that the delayed filing of e-form CHG-1 by the Company for registration of charge [Provide details of the charge] shall not adversely affect the rights of any other intervening creditors of the Company.

For [name of the Company]
__________________ __________________

[Name of the Director] [Name of the Director]
Director Director
DIN: [.] DIN: [.]

The Author of this Article is Sandhya R. Malhotra, Practicing CS from Mumbai, having experience in Company Law, for more than 15 years. She can be contacted at corporatewisdom786@gmail.com.


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Category Corporate Law, Other Articles by - SANDHYA MALHOTRA 



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