REGISTRATION OF CHARGES UNDER THE COMPANIES ACT, 2013
Chapter VI of the Companies Act, 2013, containing section 77 to 87 deals with registration of charges in the ROC. The said provisions replace the sections 124 to 145 of Chapter V of the Companies Act, 1956. As per the new provision section 77 of the Companies Act 2013, every company creating a charge on its property or assets has to register the particulars of charge signed by the Company and charge holder together with instruments with in thirty days of its creation. As per clause (3) of Section 77 of Companies Act 2013, no charge created by a company shall be taken into account by the liquidator unless it is duly registered.
On 31.03.2014, Government of India has notified rules which is called The Companies (Registration of Charges) Rules, 2014 in exercise of the powers conferred under Sections 77, 78, 79, 81, 82, 83, 84, 85, 87 read with Section 469 of the Companies Act, 2013. The same was published in the gazette and came into force on 01.04.2014.
The following are the gist of the above provisions:
· Form No CHG -1 has to be filed for creation or modification of charges other than debentures with in thirty days of creation of the charges along with instrument creating charge.
· Form No CHG -9 has to be filed for creation or modification of charges for debentures with in thirty days of creation of the charges along with instrument creating charge.
· Particulars of charge not filed with in thirty days, but filed within three hundred days of its creation or modification an additional fee shall be levied and as per Rule 4 delay may be condones up to three hundred days by the Registrar.
· The instrument evidencing creation or modification of charge certified by the Company Secretary or any director or an authorized officer of a charge holder should be filed along with the form.
· As per Rule 6, once charges registered, Registrar shall issue a certificate of registration of charge in FORM – CHG – 2. The certificate issued by the Registrar is conclusive evidence that the Chapter VI of the Companies Act 2013 is complied with.
· As per Section 81 the Registrar shall keep register containing registered charges and as per Rule 7, the particulars of charges maintained at the Ministry of Coporate affairs portal www.mca.gov.in/MCA21 shall be deemed to be the register of charges for the purpose of section 81 of the Companies Act, 2013.
· As per Rule 8, the Company shall with in thirty days of receipt of payment or satisfaction in full of any charge intimate Registrar the same in form CHG- 4 and after filing of satisfaction form in CHG – 4, the registrar shall issue certificate of satisfaction in form CHG – 5.
· As per the rules, up to 300 days of delay for registration can be condoned but as per sub section 2 of section 87, any other charge is created before delay condoned then the same shall takes priority over the charges registered after condonation.
Registration of Charges by the Creditor of the Company in the ROC as per Companies Act, 2013:
As per the new provision under section 78 of Companies Act, 2013, where a company fails to register the charge within the thirty days, the person in whose favour the charge is created may apply to the Registrar for registration of the charge along with the instrument created for the charge in Form No.CHG-1(form for other than debentures) or Form No.CHG-9 (form for debentures), as the case may be, duly signed along with fee. The registrar may, on such application, give notice to the company about such application. The company may either itself register the charge or shows sufficient cause why such charge should not be registered. On failure on part of the company, the Registrar may allow registration of such charge within fourteen days after giving notice to the company, shall allow such registration. Where registration is affected on application of the person in whose favour the charge is created, that person shall be entitled to recover from the company, the amount of any fee or additional fees paid by him to the Registrar for the purpose of registration of charge.
The relevant provision of law is reproduced hereunder:
78. Application for registration of charge
Where a company fails to register the charge within the period specified in section 77, without prejudice to its liability in respect of any offence under this Chapter, the person in whose favour the charge is created may apply to the Registrar for registration of the charge along with the instrument created for the charge, within such time and in such form and manner as may be prescribed and the Registrar 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 on payment of such fees, as may be prescribed:
Provided that where registration is effected on application of the person in whose favour the charge is created, that person shall be entitled to recover from the company the amount of any fees or additional fees paid by him to the Registrar for the purpose of registration of charge.
Therefore Bank of financial institutions may file form CHG -1 or CHG – 9, in the event of creditor fails to register the charges with in thirty days from the date of creation or modification of charges under the New Companies Act, 2013.