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LAW का DARBAAR🔥 Mission CO. LAW - Charges - 1 [Sec 77 - 87] By Divya Agarwal Mam | MEPL Classes

Mohit Agarwal・49 minutes read

The Law Ka Darbar 2.0 series covers detailed sessions on Charges from Chapter 6 of the Companies Act 2013, emphasizing the importance of timely registration to avoid additional fees and comply with the law. Failure to register charges within 30 days of creation leads to consequences such as penalties, voiding the contract, and potential fraud charges for intentional non-registration, with specific forms and processes outlined for registration and modification by the ROC.

Insights

  • Failure to register a charge within 30 days of creation can lead to penalties, with additional fees required for late registration up to 60 days, emphasizing the importance of timely charge registration to avoid legal consequences.
  • Charge registration is a critical process under the Companies Act 2013, involving specific timelines, forms like CHG 1, CHG 2, CHG 3, and CHG 9, and consequences for non-compliance, including voiding the contract, financial penalties, and potential fraud charges against directors.

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Recent questions

  • What is the importance of charge registration?

    Charge registration validates loan contracts and avoids penalties.

  • What are the consequences of failing to register a charge?

    Non-registration leads to void contracts, penalties on the company, and director liability.

  • How can charge holders register charges if companies fail to do so?

    Charge holders can register charges themselves following the same process with additional fees.

  • What is the role of the ROC in charge registration?

    ROC maintains a Register of Charges and issues certificates for charge registration and modification.

  • What are the consequences of not serving public notice for charge registration?

    Failure to serve public notice results in deemed public notice under section 80.

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Summary

00:00

Law Ka Darbar 2.0: Charges and Management

  • Law Ka Darbar 2.0 series is discussed on Mondays, with detailed sessions on Management Administration and Charges.
  • Charges are covered in Chapter 6 of the Companies Act 2013, with a detailed discussion planned over two lectures.
  • Sessions are held in the evening, lasting 40-45 minutes, focusing on specific topics like Registration of Charges.
  • The Law Ka Darbar 2.0 series schedule includes sessions on Mondays, Wednesdays, and Fridays, with a face-to-face marathon on Mondays at 11 am.
  • The charge section spans from section 77 to 87, with today's class focusing on sections 77, 78, 79, 80, 81, and 86.
  • Charges are created when a company takes a loan and mortgages assets, with registration being crucial to validate the loan contract.
  • Section 77 mandates charge registration within 30 days of creation, using forms CHG or CHG 9, along with the charge instrument.
  • Failure to register within 30 days incurs normal fees, with additional fees required if registration is delayed up to 60 days.
  • For charges created before November 2, 2018, a transitional provision allows registration within 30 days of creation or up to 300 days.
  • The importance of timely charge registration is emphasized to avoid additional fees and ensure legal compliance.

14:01

Charge Registration Guidelines and Penalties in 2017

  • 300 days have passed in 2017, if unable to complete tasks within this time, start from the day the provision was implemented retrospectively from 2nd November 2018.
  • Complete tasks within six months from the provision's implementation date or within 300 days from the creation of the charge, whichever is later, along with additional fees.
  • If a charge was created before 2nd November 2018, register it within 30 days of creation by paying normal fees; if not, within 300 days or six months from 2nd November 2018 by paying additional fees.
  • Failure to register a charge results in it being considered void, turning the charge holder into an unsecured creditor, while the loan contract remains valid.
  • Non-registration of charges leads to a penalty of ₹5 lakh on the company, with the director liable for the fine.
  • Willful non-registration with the intent to defraud creditors can result in fraud charges under section 447.
  • Charge holders must register charges themselves if the company fails to do so within 30 days, following the same process with additional fees within the next 30 or 60 days.
  • Section 78 allows charge holders to apply for charge registration if the company fails to do so, with a similar process and fees as mentioned earlier.
  • Ad valorem fees are calculated based on the asset's value, ensuring the filing fee aligns with the charge's worth.
  • Section 79 pertains to modifying charges, allowing companies to alter loan terms and conditions, such as changing the loan duration from 5 to 3 years.

26:07

Loan Terms Changes Must Be Reported

  • Any material changes in terms and conditions of a loan must be reported to the ROC, such as altering the loan tenure, repayment schedule, security, due date, or interest rate.
  • Modifications that are automatically triggered by changes in the bank rate are not considered as part of the charge modification process.
  • The process of charge modification involves changes in interest rates, loan tenor, repayment schedules, partial repayments, or security alterations.
  • Submission of CHG 1 or CHG 9 forms to the ROC is required within specific time limits, depending on the nature of the charge modification.
  • The issuance of a Certificate of Registration of Charge (CHG 2) by the ROC serves as evidence of the charge registration.
  • A Certificate of Modification of Charge (CHG 3) is issued by the ROC in case of charge modifications.
  • Section 80 stipulates that once a charge is registered with the ROC, it is deemed as public notice, eliminating the need for separate announcements.
  • Section 81 mandates the ROC to maintain a Register of Charges for every company, accessible on the MCA website.
  • Section 86 outlines the consequences of failing to register a charge.
  • Various forms such as CHG 1, CHG 2, CHG 3, and CHG 9 are utilized for charge registration and modification, with specific roles and issuance of certificates by the ROC.

42:20

Consequences of Failure to Register Charge

  • ROC issues a certificate of modification in three cases and nine Debenture cases.
  • Failure to register a charge within 30 days of creation leads to consequences.
  • The company can still register the charge within the next 30 days by paying additional fees.
  • If the charge remains unregistered, it attracts section 86 consequences.
  • Non-registration of the charge results in voiding the contract and penalties of Rs 5 lakh on the company and Rs 50,000 on the ID.
  • If default is proven to defraud creditors, the ID is liable for fraud under section 447.
  • Failure to serve public notice for charge registration results in a deemed public notice under section 80.
  • Section 78 allows the charge holder to register the charge even if the company fails to do so.
  • Changes in bank interest rates do not constitute a modification of charge under section 79.
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