Companies / Charge holders will be responsible for paying / intimating satisfaction of charge within 300 days from the date of the payment or satisfaction, says MCA

Companies / Charge holders will be responsible for paying / intimating satisfaction of charge within 300 days from the date of the payment or satisfaction, says MCA

July 13, 2018 CORP, Industries, states 0

The Ministry of Corporate Affairs (“MCA”) has in a Notification dated 5th July, 2018, issued the Companies (Registration of Charges) Amendment Rules, 2018 (“Amendment Rules”), which further amends the Companies (Registration of Charges) Rules, 2014 (“Principal Rules”).

The Amendment Rules will come into force once it is published in the Official Gazette.

The implications of the Amendment Rules vis-à-vis the Principal Rules are provided below:

Principal Rules Amendment Rules Implications
3. Registration of creation or modification of charge.

(1) For registration of charge as provided in subsection (1) of Section 77, Section 78 and Section 79, the particulars of the charge together with a copy of the instrument, if any, creating or modifying the charge in Form No.CHG-1 (for other than Debentures) or Form No.CHG-9 (for debentures), as the case may be, duly signed by the company and the charge holder and filed with the Registrar within a period of thirty days of the date of creation or modification of charge along with the fee.

3. Registration of creation or modification of charge.

(1) For registration of charge as provided in subsection (1) of Section 77, Section 78 and Section 79, the particulars of the charge together with a copy of the instrument, if any, creating or modifying the charge in Form No.CHG-1 (for other than Debentures) or Form No.CHG-9 (for debentures), as the case may be, duly signed by the company and the charge holder and filed shall be filed with the Registrar within a period of thirty days of the date of creation or modification of charge along with the fee.

The Amendment Rules proposes to substitute the words “and filed” with the word “shall be filed” in the said provision pertaining to registration of creation / modification of charge.
8. Satisfaction of charge-

(1) A company shall within a period of thirty days from the date of the payment or satisfaction in full of any charge registered under Chapter VI, give intimation of the same to the Registrar in Form No.CHG-4 along with the fee.

8. Satisfaction of charge-

(1) A company or a charge holder shall within a period of thirty days three hundred days from the date of the payment or satisfaction in full of any charge registered under Chapter VI, give intimation of the same to the Registrar in Form No.CHG-4 along with the fee.

 

In line with the amendment of Section 82 of the Companies Act, 2013 (“Act”), by the Companies (Amendment) Act, 2017 (“2017 Amendment), the timeline for allowing a company or a charge holder to intimate payment or satisfaction of charge has been set on three hundred days from such payment / satisfaction.

The proposed Amendment Rules intends to incorporate amendments on the same lines. In the said provision of the Principal Rules, the the word ‘Charge Holder’ will soon be inserted, making them responsible for intimating the  Registrar regarding reporting satisfaction of charge in Form No. CHG-4.

The timeline within which a company / a charge holder is required to intimate the Registrar, is brought in lines with the 2017 Amendment. The timeline under the Principal Rules is soon to be extended from thirty days to three hundred days.

12. Condonation of delay and rectification of register of charges.-

(1) Where the instrument creating or modifying a charge is not filed within a period of three hundred days from the date of its creation (including acquisition of a property subject to a charge) or modification and where the satisfaction of the charge is not filed within thirty days from the date on which such payment of satisfaction, the Registrar shall not register the same unless the delay is condoned by the Central Government.

12. Condonation of delay and rectification of register of charges.-

(1) Where the instrument creating or modifying a charge is not filed within a period of three hundred days from the date of its creation (including acquisition of a property subject to a charge) or modification and where the satisfaction of the charge is not filed within thirty days within a period of three hundred days from the date on which such payment of satisfaction, the Registrar shall not register the same unless the delay is condoned by the Central Government.

In reference to the 2017 Amendment to Section 82 of the Act, where the timeline for allowing a company or a charge holder to intimate payment or satisfaction of charge has been set on three hundred days from such payment / satisfaction, the proposed amendment intends to extend the period for filing the instrument modifying a charge from thirty days to three hundred days.

As per the proposed amendment, if the charge is not filed within the stipulated date from the date on which the payment of satisfaction is made, the Registrar shall not register the charge unless the delay is condoned by the Central Government.

 

Source: Ministry of Corporate Affairs

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