CS Divesh Goyal | Nov 29, 2018 |
New Norms of Charge Creation and Modification Companies Act | New Norms- Charge Creation/ Modification Companies Act 2013 & Company (Amendment) Ordinance 2018 :
Creation/ modification of charge are one of crucial activity for Loan from Bank/ financial institutions etc.When Companies Act, 2013 introduced at that time Charge satisfaction form required to be submitted with ROC within 30 days of satisfaction otherwise Company have to file application of compounding with Regional Director. However, by Companies Amendment Act, 2017 this limit of 30 days increased up to 300 days as balanced with Creation/ modification of Charge.
However, Companies (Amendment) Ordinance, 2018 have changed the period for Creation/ Modification of Charge with tighter time based norms;
Section Involved : Section 77 Duty to Register Charge
i. BEFORE ORDINANCE :As per Section 77 of Companies Act, 2013, Company have to create charge with the Registrar within30 daysof creation of Charge.
Providedthatthe Registrar may, on anapplicationby the company, allow such registration to be made within a period ofThree Hundred Daysof such creation on payment of such additional feesas may be prescribed:
Condonation : Provided furtherthat if registration is not made within a period of three hundred days of such creation, the company shall seek extension of time in accordance with section 87
ii. AFTER ORDINANCE :As per Section 77 of Companies Act, 2013, Company have to create charge with the Registrar within30 daysof creation of Charge.
Provided thatthe Registrar may, on an application by the company, allow such registration to be made within a period ofSixty Daysof such creationon payment of such additional fees as may be prescribed
In place of Condonation : Provided furtherthat if the registration is not made within the period specified
TheRegistrar may, on an application, allow such registration to be made within a further period ofSixty Days after payment of such ADVALOREM fees as may be prescribed
Quick Bites :
i. If Charge is created before date of Ordinance i.e. 02.11.2018 in such case filling shall be according to new provisions or old provisions
As per Act before ordinance or after ordinance both states that company shall file form for registration of charge within30 daysof creation.
In case company fails to file the samewithin 30days of Registration and date of creation of charge is before 02.11.2018 in that case:
Provided thatthe Registrar may, on an application by the company, allow such registration to be made within a period ofthree hundred daysof such creation on payment of such additional fees as may be prescribed.
Provided further that if the registration is not made within the period specified i.e. 300 days from such creation thenthe registration of the charge shall be made within six months from the date of commencement of the Companies (Amendment) Ordinance, 2018, on payment of such additional fees as may be prescribed and different fees may be prescribed for different classes of companies.
Note : Thus, one can opine that as per ordinance there is no way for Condonation for creation/ modification of charge under companies act after 02.11.2018.
After 02.11.2018 form can be file as per prescribed time with such additional fees plusADVALOREMas may be prescribed.
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ii. If Charge is created after date of Ordinance i.e. 02.11.2018 in such case what shall be time period for filing of form for registration of charge with ROC.
If charge is created after 02.11.2018 in such case following shall be period for filing of charge form with ROC.
| STAGE | PARTICULAR | TIME PERIOD | Days | FEES |
| i. | Registration of Charge with ROC | Within 30 days of Creation | 0+30 | Normal Fees |
| ii. | If Fails to file with in 30, days | within a period of 60 days of such creation | 0+30+30 = 60 | Normal Fees + Additional Fees |
| iii. | If Fails to file with in 60, days | Registrar may, on an application, allow such registration to be made within a further period of sixty days | 0+30+30+60 = 120 | Normal Fees + Additional Fees + AdvaloremFees |
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iii.As per question no. II if company fails to file form for creation/ modification of charge within 120 days of creation of charge. In such case whether company can file application for Condonation to Regional Director u/s 87.
As per Ordinance, 2018 there is modification in Section 87 of Companies Act, 2018.
| Before Ordinance | After Ordinance |
| TheCentral Governmenton being satisfied that (i) (a) the omission to file with theRegistrarthe particulars of anychargecreated by acompanyor any charge subject to which any property has been acquired by a company or any modification of such charge; or | The Central Government on being satisfied that (a) the omission to give intimation to the Registrar of the payment or satisfaction of a charge, within the time required under this Chapter; or |
Note : After ordinance i.e. 02.11.2018 clause relating to Condonation of delay in creation/ modification of charge has been removed from Section 87.
Thus, one can opine that as per question no. II if company fails to file e-form CH-1 for creation / modification of charge within 120 from creation of charge then there is no way under Companies act for filing of such form with ROC.
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iv.If Charge is satisfied before/ after date of Ordinance i.e. 02.11.2018 in such case what shall be time period for filing of form for satisfaction of charge of charge with ROC.
If charge is satisfied even before or after 02.11.2018 in such case following shall be period for filing of e-form CHG-4 for satisfaction of charge with ROC.
| STAGE | PARTICULAR | TIME PERIOD | Days | FEES |
| i. | Satisfaction of Charge with ROC | Within 30 days of Satisfaction | 0+30 = 30 | Normal Fees |
| ii. | If Fails to file with in 30, days | within a period of 300 days of such satisfaction | 0+30+270 = 300 | Normal Fees + Additional Fees |
| iii. | If Fails to file with in 300, days | Filing of form with RD for satisfaction of Charge | 0+30+270+—-= —— | Normal Fees + Additional Fees + Condonation fees |
Note : Provisions for Condonation of delay in satisfaction of charge is still there in act even after ordinance.
Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at[email protected]).
Disclaimer : The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION
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