The Companies Act, 2013 represents a Charge as an interest or claim formed on the assets or resources of a Corporation or any of its project as security and includes a mortgage U/s 2(16). In the earlier Act of 1956, the word “Mortgage” was not included. Section 124 to section 145, 1956 confronted the charges. Under the Companies Act, 2013[1] , section 77 deal with the same thing.
The company may acquire wealth by giving security of its assets and may create a claim on the properties of any registered company. The company may also allot Debentures to boost capitals which may carry a right/ interest in the Assets/Properties of the Company.
What is the Need for Creating a Charge?
Almost all the companies depend upon share and borrowed capital for financing their projects. Borrowed money may consist of capitals fostered by issuing debentures or by acquiring financial assistance from banks.
The financial institutions or banks do not lend funds easily unless they are sure that their investment is safe.
To ensure security of their loans, they resort to creating right in the assets of the borrowing corporations, known as a charge on assets. This is achieved by executing loan agreements, mortgage deeds and other similar documents.
Duty to Register Charge
A business creating a charge shall register the facts of the said charge with the RoC within a time frame of 30 days.
This charge could be:
- On its assets or property
- Any of its projects
- Whether tangible or intangible
- Situated in or outside of the country.
- Signed by either the charge-holder or company.
- Together with the instruments forming the charge.
Registration or Modification of Charge
For registration of particulars of the charge duly approved by the corporation and the charge holder filed with the Registrar within a period of 30 days of the date of modification or creation of charge along with the fee.
The supplementary fee shall be levied, if the specifications of a charge are not registered within the period above, but filed within 300 days of the date of such modification or creation.
A copy of every instrument evidencing any modification of charge required to be filed with the Registrar shall be verified as follows-
- where the instrument relates singly to the property situated outside India, the copy shall be confirmed by a certificate issued either by the company or under the hand of any director of the corporation or an authorized officer.
- Where the instrument relates, wholly or partly, to the property situated in India, the copy shall be confirmed by a certificate assigned under the company secretary or an authorized officer of the charge holder.
- Where a charge is enrolled with the Registrar, the Registrar shall assign a certificate of registration of charge in Form No.CHG-2.
Satisfaction of Charge
A corporation shall within 30 days from the date of the payment, give the implication of the same to the Registrar in Form No. CHG-4 with the fee included.
Where the Registrar accesses a notice of satisfaction of charge under section 82 or 83, he shall issue a certificate of registration of satisfaction of charge in Form No. CHG-5.
Conclusion
Let wrap up the things with a quick summary- satisfaction of charge is formed as security for a loan or as security for some other purpose. If the amount of loan is repaid, there remains no necessity of the charge. This is called satisfaction of charge. Hopefully, this blog has briefed you everything regarding satisfaction of charge. Fore more “Company to Report Satisfaction of Charge” related details, contact Corpbiz, our experts will assist you.
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