Charge Creation and Registration with MCA — Section 77 Companies Act Compliance

When a company creates a security interest on its assets in favour of a lender (bank, NBFC or other financial institution), this security interest is called a "charge" under the Companies Act 2013. Every such charge must be registered with the Registrar of Companies (ROC) within 30 days of its creation. Here is the complete guide to charge registration and compliance.

What is a Charge?

A "charge" under Section 2(16) of the Companies Act means an interest or lien created on the property or assets of a company or any of its undertakings or both as security — in favour of a creditor (typically a bank or NBFC). Types of charges include:

• Fixed charge — on specific identified assets (land, building, specific machinery)
• Floating charge — on a class of assets that changes from time to time (inventory, receivables)
• Hypothecation — on movable assets without transfer of possession
• Mortgage — on immovable property
• Pledge — on specific assets with transfer of possession

Section 77 — Mandatory Charge Registration

Under Section 77, every company creating a charge must register it with the ROC (at the MCA-21 portal) within 30 days of the date of creation. Key points:

• File Form CHG-1 (for charges other than debentures) or Form CHG-9 (for debentures and global charges)
• Attach the instrument creating the charge (hypothecation agreement, mortgage deed, etc.)
• Both the company and the charge holder have the right to file
• ROC issues a Certificate of Registration of Charge upon acceptance

Late Filing — Condonation

• 30-300 days late: Application for condonation with additional fees to ROC
• Beyond 300 days: Application must be filed before the Regional Director (RD) with prescribed fees and explanation
• Beyond 3 years: Only NCLT can condone the delay

Modification of Charge — Form CHG-1

If the terms of the charge are modified (increase/decrease in amount, change in security, change in chargee), the modification must be registered using Form CHG-1 (with the modification option) within 30 days of modification.

Satisfaction of Charge — Form CHG-4

When the loan is repaid and the charge is released, the company must file Form CHG-4 to record satisfaction of the charge with ROC within 30 days of satisfaction. Without this filing, the charge continues to appear in public records even after the loan is repaid.

CERSAI Registration

For charges on movable property under the SARFAESI Act, banks also register the security interest on CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest) — a separate system from MCA charge registration. Both registrations may be required.

Conclusion

Charge registration is a mandatory compliance that directly affects the legal validity and enforceability of your bank's security. SPOTON handles Form CHG-1, CHG-4 and ROC charge compliance for companies across Kerala. Contact us for expert MCA compliance services.