Creation or Modification of Charges – Companies Act 2013

Estimated Reading Time: 10 minutes


The pandemic has created major economic changes in the global economy, during this the major relief for the companies that needs to raise funds through debt, the Ministry of Corporate Affairs (MCA) has notified a seven months relaxation for filings relating to the creation or modification of charges on these instruments as per companies Act on March 2020. 

The regulatory filings of charges on property, assets or any undertaking created on March1st, 2020, the MCA created the scheme for relaxations to condone the delays in fillings which  were applicable till September 2020. 

The ministry received a series of questions on the same on which the representations received to relax the timeline to provide the window for compliance with filing of charges on account of the pandemic and benefit of waiver of the additional fees was not extended to charge related filings under this scheme. Therefore, it has been suggested that there will be some dispensation provided for filing the charge related document. 

Most of the large and small companies depend on share capital and borrowed capital for operations issuing debentures, secured or unsecured or even raise funds through banks or other financial institutions. Banks or financial institutions in order to secure their funds, they look upon collaterals like assets of the companies that they borrow. The banks use hypothecation, loan, or mortgage agreements etc. This is known as “Charge on Assets”. 

Following are the types of charges as per Section 77, which are to be registered with ROC, within 30 days of creation and additional days upon application to Registrar of Companies (RoC), with additional fees. 

  • within or outside India,
  • on its property or assets or any of its undertakings,
  • whether tangible or otherwise, and
  • situated in or outside India

Under this new scheme, any charges created between the dates of March 1stto September 30th, 2020, including the people who have filed or yet to be done within this period, the seven months provision would not be counted. 

Creation of charge is crucial to these debts and registering these charges under the RoC by the deadline which falls during this period is a challenge for the companies. The scheme will not be applied for the charges that have already been filed before March 1st and those charges for which the timeline for filing exceeds the mentioned period. 


As per section 77 of the companies Act 2013, the charge must be registered with the ROC within 30 days of the creation or modifications, this period can be extended up to 270days.

Section 77 obligates those companies :

  • Within India or outside India
  • On its properties or assets or its undertakings
  • Whether tangible or otherwise and situated in or outside India

The section describes as follows: 


For the registration of charge provided in section 77 of the companies act , along with sections 78 and 79, the particulars of the charge (copy of the instrument if any creation or modifying ) shall be filed with ROC in the form – CHG-1 or the form -CHG-9 by company or charge holder, as the case may be where the date of creation modification is : 

Also Read  Discuss the challenges to International Arbitral awards conducted in India

 Before March 1st, 2020, the timeline for filing as provided under section 77, did  not expire on March 1st, 2020 from the date of creation /modification. 

Section 78 deals with the person in whose favor the charge is created, in the event of company fails to file the charges. In case, the person needs to give a minimum notice of a period of 14 days to company prior to such filing. 

Modification of Charges

Procedure for filing modification of charge is same as that of Creation of Charge  Similar to that of creation, once the modification of charge is filed, the RoC shall issue a certificate in the form of CHG-3. It is to be noted that any form of change in the terms or conditions or extend or operation also warrant registration for the relevant sections.

The satisfaction of Charges

The satisfaction of a charge arrives when the charge is created for security for loan or debentures or for some purpose, when this amount is repaid or fulfilled, and the reason that there is no necessity or relevance of the charge itself. 

Section 82 deals with satisfaction of charge, to be filed in a form CHG-4 within 30 days of such satisfaction of charge. Condonation rules apply for the satisfaction also same as in the case of creation or modification as detailed in the section below. 

Certificate of Registration of Charge

Once the application is filed with the Registrar of Companies in the prescribed format, the RoC after being satisfied with the application, RoC will provide a certificate of registration of charge in the form CHG-2 to the person in whose favour the charge is created and entitle the company and its creditors the rights at the time of liquidation.

Punishment for the Delay of Registration

As per clause (1) of section 77 , it is the duty of every company to register the particulars of the charge signed by the company and the charge – holder together with the instruments, if any creation such charge with the ROC within 30 days of its creation , the creation and modification in terms or conditions or extent or operation of any charge to be registered under this section. The punishment to delay in contravention is stated under section 86 of companies Act 2013.

Condonation by Central Government

RoC shall not register the Charge or Satisfaction of Charge unless condoned by Central Government, in the following scenarios:

  • If the charge is not filed within a period of Three Hundred Days from the date of its creation or modification. 
  • If the Satisfaction Instrument of Charge is not filed within 300 Days from the date of payment of satisfaction. 

As per section 87 of the Act, sub-section (1), based on the order passed by Government of India, an application for the condonation of delay to be filed in the form of CHG-8 along with fee along with form No: INC 28

Forms used for e-Filing under this scheme

  • CHG-1 – For Creating or Modifying Charges other than debentures
  • CHG-2 – Certificate of Registration of charge.
  • CHG-3 – Certificate of Modification of charge.
  • CHG-4 – Form used for Intimation of the satisfaction to the registrar.
  • CHG-5 – Form to be used for Memorandum of satisfaction of charge.
  • CHG-6 – Notice of appointment or cessation or receiver or manager.
  • CHG-7 – Form for Register of charges.
  • CHG-8 – Form for Application for condonation of delay shall be filed the Central Government.
  • CHG-9 – Form for Creating or modifying the charge in (for debentures including ractification)
  • CHG-10 – Form to be used for application for delay to the registrar.
Also Read  Covid-19 Vaccine and Patent Laws: International and Indian Position

Applicable Fee

If the charges created are before the date Nov 2nd, 2018

  • If the form filed on or before the exemption period 30 days from the creation of such charge, normal fee shall be payable 
  • If the form filed after completion of exemption period i.e. 30+270 days=300days, then the company will have to pay the normal fees plus additional fees. 

After the ordinance Nov 2nd, 2018

  • If the form filed on or before the exemption period – 30 days from the creation of such charge, normal fee shall be payable 
  • If the form filed after completion of 30 days from the exemption period, i.e. 30+30 days=60days, then the company will have to pay the normal fees plus additional fees. 
  • If the company fails to file within 60 days, 30+30+60 =120 days, additional fees plus ‘advalorem’ fees along with normal fees to be paid for such registration. 

Relaxations given under this scheme

    1. In the case where the date of creation or modification of charge is before 01.03.2020: 

The period starting from 01.03.2020 to the date of 30.09.2020 will not be included for the purpose of calculating the 120 days.

  • In the case where the date of creation or modification of charge is during the exclusion period, i.e. from 01.03.2020 to 30.09.2020.

The period starting from the date of creation or modification of charge to the date of 30.09.2020 will not be taken into account for the calculation of the 120 days.

  • Following Charges are not necessary to file with RoC
  • Guarantee that does not need any registration
  • Charges created by operation of law
  • Negotiable Instrument (Hundi), not considered as charge

Effect of non-registration of charge

Section 77(3) of the Act states that in case no charge is created by a company, i.e. a charge is not registered, and a certificate of registration is not issued by the Registrar of Companies, then the charge shall not be taken into account by the liquidator or any other creditor. However, nothing provided in Section 77(3) of the Act shall prejudice any contract or obligation for the repayment of the money secured by a charge.


In the first case, where the form is filed on or before 30.09.2020, the fees which is payable under the rules for the said form shall be charged. The form to be filled thereafter, the applicable fees shall be considered adding the number of days beginning from 01.10.2020 and ending on the date of filing plus the time frame lapsed from the date of creation of charge till 29.02.2020.


A legal professional, being aware of the changes need to advise the companies to comply with the above-said code that filing of creating a charge with registrar within 30 days of such creation to avoid any penalty. 

Not only the fine with the company in question for default, but the officers concerned are also liable to be punished with imprisonment for a term of 6 months and or with fine.