As per Section 77 of the Companies Act, 2013 ("Act") and rules made thereunder and Companies (Registration of offices and Fees) Rules, 2014, it shall be the duty of every company creating (including modifying) a charge on its property or assets or any of its undertakings to register the particulars of the charge with the Registrar within 30 days of its creation by filing Form CHG-1 (for other than debenture) or Form CHG-9 (in case of debenture), as the case may be.
However, if the charge is created or modified after 01.08.2019 and the relevant charge form is not filed within a period of said 30 days, then the charge can be created or modified maximum within 120 days from creation or modification of charge by paying the additional fee and ad Valorem fee as detailed below:
|
PERIOD OF DELAY AFTER EXPIRY OF 30 DAYS FROM CREATION OF CHARGE |
SMALL COMPANIES AND ONE PERSON COMPANY |
OTHER THAN SMALL COMPANIES AND ONE PERSON COMPANY |
|
Up to 30 days |
3 times of normal fees |
6 times of normal fees |
|
More than 30 days and up to 90 Days |
3 times of normal fees plus an advalorem fee of 0.025 % of the amount secured by the charge, subject to the maximum of one lakh rupees. |
6 times of normal fees, plus an advalorem fee of 0.05 % of the amount secured by the charge, subject to the maximum of five lakh rupees |
It may be noted that after the expiry of the above timeline of 120 days, there is no option of condonation of delay or making the default good as per prevailing provisions of the relevant sections and rules relating to charge.
However, on account of a pandemic caused by COVID-19 and consequent delays in filing of forms relating to creation or modification of charges due to operational difficulties, Ministry of Corporate Affairs vide its general circular no. 23/2020[1] dated 17.06.2020 has introduced Scheme for relaxation of time for filing Form CHG-1 and/or Form CHG-9 related to creation or modification of charges under Companies Act, 2013 and condonation of delay in filing certain charge related forms ("Scheme") as explained below:
|
Basis |
Relaxation by MCA under Scheme |
Illustrative dates |
|
Date of Creation / Modification |
Date of creation / modification of charge is before 01.03.2020 |
|
|
Relaxation (i.e. exclusion period) |
Period beginning from 01.03.2020 and ending on 30.09.2020 shall not be reckoned for the purpose of counting the number of days under section 77 or section 78 of the Act. |
|
|
Calculation of maximum period of 120 days |
In case, the form is not filed within such period (i.e. b/w 01.03.2020 to 30.09.2020), the first day after 29.02.2020 shall be reckoned as 01.10.2020 for the purpose of counting the number of days within which the form is required to be filed under section 77 or section 78 of the |
|
|
Fee payable |
If the form is filed on or before 30.09.2020, the fees payable as on 29.02.2020 under the Fees Rules for the said form shall be charged up to 30.09.2020. If the form is filed after 30.09.2020, the applicable fees shall be charged under the Fees Rules after adding the number of days beginning from 01.10.2020 and, ending on the date of filing plus the time period lapsed from the date of the creation of charge till 29.02.2020. |
|
|
Basis |
Relaxation by MCA under Scheme |
Illustrative dates |
|
Date of Creation / Modification |
Date of creation / modification of charge is on or after 01.03.2020 and up to 30.09.2020 |
|
|
Relaxation (i.e. exclusion period) |
In case the charge is created / modified after 01.03.2020, Period beginning after 01.03.2020 and ending on 30.09.2020 shall not be reckoned for the purpose of counting the number of days under section 77 or section 78 of the Act |
|
|
Calculation of maximum period of 120 days |
In case, the form is not filed within up to 30.09.2020, the first day after the date of creation / modification of charge shall be reckoned as 01.10.2020 for the purpose of counting the number of days within which the form is required to be filed under section 77 or section 78 of the |
|
|
Fee payable |
If the form is filed on or before 30.09.2020, normal fees shall be payable under the Fees Rules up to 30.09.2020. If the form is filed after 30.09.2020, the applicable fees shall be charged under the Fees Rules from 01.10.2020 and the number of days till the date of filing of the form shall be counted accordingly for the purposes of payment of fees under the Fees Rules. |
Non-Applicability of the Scheme:
The Scheme shall not apply, in case:
(a) The forms i.e.CHG-1 and CHG-9 had already been filed before the date of issue of this Circular.
(b) The timeline for filing the form has already expired under section 77 or section 78 of the Act prior to 01.03.2020.
(c) The timeline for filing the form expires at a future date, despite the exclusion of the time provided in sub-para (iii) above.
(d) Filing of Form CHG-4 for the satisfaction of charges.
The author can also be reached at acslakhan@gmail.com
[1] http://www.mca.gov.in/Ministry/pdf/Circular23_17062020.pdf
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