Registration of Charges

 Registration of Charges

Introduction

According to Section 2(16) of the Companies Act, a Charge is defined as an interest or lien established on the assets or property of a Company or any of its undertakings as security, and this definition also encompasses a mortgage. Additionally, the Companies Act mandates that all companies must register any Charges created by the Company and keep a record of them.


What is Register of Charges ?

To maintain a register of charges, as discussed earlier in Form No. CHG.7, every company must keep a record at their registered office. It is crucial to note the following additional points:

  • The register must contain all details, including charges registered with the Registrar on any property, assets, or undertaking of the company, and particulars of the acquired property on which the charge is created. It must also record any modifications or satisfactions of charges.
  • The entries in the register should be made immediately after creating, modifying, or satisfying a charge. These entries should be authenticated by a director, the secretary of the company, or any other authorized person approved by the Board.
  • The register of charges should be preserved permanently.
  • The instrument that creates or modifies a charge must be preserved for eight years after the satisfaction of the charge by the company.
  • Any member or creditor of the company can inspect the register of charges without fees, and anyone else can do so by paying a fee. There are fees for delays in charge registration.

Legal Obligation to Register Charges

  • Under the Companies Act, 2013, a Company has a legal obligation to register all types of Charges, whether created within or outside India. As per Section 77 and Section 85 of the Act, a Company creating a Charge must register the particulars of the Charge, along with the instruments creating it, signed by the Company and its Charge holder.
  •  The Act specifies that any Charge created on the Company's property, assets, or undertakings, tangible or intangible, situated in or outside India, must be registered. Additionally, every Company must maintain a register of Charges at its registered office in Form No. CHG.7. This register must include all Charges and Floating Charges affecting any property or assets of the Company or any of its undertakings

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