Difference between revisions of "Power of Registrar to make entries of satisfaction and release in absence of intimation from company"

From Advocatespedia, ASSN: 128576
Jump to navigation Jump to search
(Created page with "'''Introduction''' Section 83 of the Companies Act, 2013 states the Power of Registrar to make entries of satisfaction and release in absence of intimation from company. The...")
 
 
Line 163: Line 163:
 
17. The order passed by the Central Government shall be required to be filed with the Registrar in Form No.INC.28 along with the fee as per the conditions stipulated in the said order.
 
17. The order passed by the Central Government shall be required to be filed with the Registrar in Form No.INC.28 along with the fee as per the conditions stipulated in the said order.
  
18. For all other matters other than condonation of delay, application shall be made to the Central government in Form No.CHG-8 along with the fee.<ref> https://www.icsi.edu/media/portals/0/REGISTRATION%20OF%20CHARGES.pdf</ref>
+
18. For all other matters other than condonation of delay, application shall be made to the Central government in Form No.CHG-8 along with the fee.
  
 
[[Category:Law]]
 
[[Category:Law]]
 
[[Category:The companies act, 2013]]
 
[[Category:The companies act, 2013]]

Latest revision as of 14:49, 1 July 2020

Introduction

Section 83 of the Companies Act, 2013 states the Power of Registrar to make entries of satisfaction and release in absence of intimation from company. The same being effective from 1st April, 2014.

1) The Registrar may, on evidence being given to his satisfaction with respect to any registered charge,—

(a) That the debt for which the charge was given has been paid or satisfied in whole or in part; or

(b) that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking, enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of the property or undertaking has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be, notwithstanding the fact that no intimation has been received by him from the company.

(2) The Registrar shall inform the affected parties within thirty days of making the entry in the register of charges kept under sub-section (1) of section 81[1] For a better and clear understanding of the above stated provision it is necessary to understand the following key words-

1. Registrar- Section 2(75) of the Companies Act, 2013 provides that, Registrar means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar, having the duty of registering companies and discharging various functions under this Act.

2. Charge- Charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage.

3. Memorandum of Satisfaction- Refer rule 8 of the Companies (Registration of Charges) Rules, 2014.

4. Rule 8 of the Companies (Registration of Charges) Rules, 2014- Satisfaction of charge.-

(1) A company or charge holder shall within a period of 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.

(2) Where the Registrar enters a memorandum of satisfaction of charge in full in pursuance of Section 82 or 83, he shall issue a certificate of registration of satisfaction of charge in Form No.CHG-5.[2]  

Guidelines related to Charge under Companies Act, 2013

As per Section 2(16) of the Companies Act, 2013, ‘Charge is defined as an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage‘.

Concept of charge is explained under Chapter VI of the Companies Act, 2013 ranging from Section 77 to 87. We will discuss the sections in detail.

Section 77: Duty to Register Charges, etc. -

It is the responsibility of the company to get the charge registered

• Any charge created within or outside India

• For Property or assets (tangible or intangible) or any undertaking

The charge needs to be registered in the Form CHG-1 (Other than Debentures)/CHG-9 (Charge for Debentures).

The registrar, on being satisfied, will issue the certificate of charge registration in the form CHG-2.

It is important to note that the liquidator, appointed under the act or IBC, or any other creditor will not take into account the charge created by the company unless it is registered by registrar. However, this would not invalidate any contract or obligation secured by the charge.

The guidelines for registration of charge shall apply mutatis- mutandis to modification of charge and a company acquiring any property subject to a charge (Section 79)

Section 78: Application for registration of charge-

Section 78 provides the right to the Charge holder to apply for charge creation subject to the fulfilment of following condition:

• Company does not fill the form within the time period prescribed under the section 77(1) i.e., 30 days from charge creation.

The registrar will register the charge after giving notice of 14 days to the company.

Section 80: Date of notice of charge-

Where any charge on any property or assets of a company or any of its undertakings is registered under Section 77, any person acquiring such property, assets, undertakings or part thereof or any share or interest therein shall be deemed to have notice of the charge from the date of such registration.

This implies that the person dealing with the assets related to the company should make a proper due diligence.

Section 81: Register of charges to be kept by registrar-

• The register of Charges maintained at MCA21 will suffice.

• Any person can inspect the register on payment of applicable fees,

Section 85: Company’s register of Charges-

• Company will maintain the register in Form CHG 7.

• Any member or creditor without payment of fees can inspect the register.

• Any other person on payment of fees Subject to such reasonable restrictions as imposed by the AOA of company can inspect the register.

Section 84: Intimation of Appointment of Receiver or Manager-

If any receiver is appointment, the intimation of the same shall be given to the company as ROC. The vacation of the same shall also be intimated to the company and ROC

Section 86: Punishment for contravention-

• In case of contravention of the provisions, following penalties may be levied:

1. Monetary- A Minimum of Rs 1 lac and a Maximum of Rs 10 lac on Company and a Minimum of Rs25 thousand and a Maximum of Rs 10 lac on Officer.

2. Imprisonment- A Maximum of 6 months to an Officer.

• If any person wilfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of section 77, he shall be liable for action under section 447.

Section 87 Rectification by Central Government in Register of Charges-

The Central Government, on the basis of the application filed, may extend the time period for filing form related to the below on being satisfied that the:

Omission to give registrar intimation related to satisfaction of charge, within the stipulated time period Omission or misstatement of any particulars in any filling previously made to the registrar with respect to any such charge or modification or satisfaction of charge Was accidental or due to inadvertence or some other sufficient cause, or not prejudice to the position of creditors or shareholders.[3]

Section 83 Briefly Explained

• The Registrar may on evidence being given to his satisfaction with respect to a registered Charge:

1. that the debt for which the charge was given has been paid or satisfied in whole or in part,

or

2. that part of the property or undertaking has been released from the charge or has ceased to form part of the Company’s property or undertaking, as the case may be, enter in the register of charges a memorandum of satisfaction with respect to the above stated charge

• Notwithstanding the fact that no intimation has been received by him from the Company

• The Registrar shall inform the affected parties within thirty days of making the entry in the register of charges[4]

What is charge?

In common parlance a charge is a right created by any person including a company referred to as “the borrower” on its assets and properties, present and future, in favour of a financial institution or a bank, referred to as “the lender”, which has agreed to extend financial assistance.

As per Section 2(16) of the CA, 2013 charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage.

Procedure for Registration of Creation/ Modification Satisfaction of Charge

If a company has passed special resolutions under Section 180(3)(c) of the Companies Act, 2013, authorising its Board of directors to borrow funds for the requirements of the company and under Section 180(1)(a) of the Companies Act, 2013, authorising its Board of directors to create charge on the assets and properties of the company to provide security for repayment of the borrowings in favour of the financial institutions/banks or lenders and in exercise of that authority has signed the loan documents and now proposes to have the charge, created by it registration with the ROC, should follow the procedure detailed below:

1. Where the special resolution is passed as required under section 180 of the Companies Act, 2013, form MGT14 of the Companies (Management and Administration) Rules, 2014 is to be files with the registrar.

2. According to section 77 of the Companies Act, 2013 every company creating any charge created within or outside India on property or assets or any of the company’s undertakings whether tangible or otherwise, situated in or outside India shall have to be registered, For the purpose of creating/ modifying a charge file particulars of the charge with the concerned Registrar of Companies within thirty days of creating the Form No.CHG -1 m No.CHG -1 (for other than Debentures) or Form No.CHG - 9 (for debentures including m No.CHG – 9 rectification), as the case may be.

3. Attach the following documents with e-form No. CHG9/ CHG -1: 9/ CHG -1

• A certified true copy of every instrument evidencing any creation or modification of charge.

• In case of joint charge and consortium finance, particulars of other charge holders.

• Instrument(s) evidencing creation or modification of charge in case of acquisition of property which is already subject to charge together with the instrument evidencing such acquisitions

4. Payment of fees can be made online in accordance with Annexure ‘B’ of Companies (Registration offices and fees) Rules, 2014. Electronic payments through internet can be made either by credit card or by internet banking facility.

5. If the particulars of charge cannot be filed within thirty days due to unavoidable reasons, then it may be filed within three hundred days of such creation after payment of such additional fee as prescribed in with Annexure ‘B’ of Companies (Registration offices and fees) Rules, 2014.

6. Such application for delay to the registrar shall be made in Form No.CHG-10 and supported by a declaration from -10 the company signed by its secretary or director that such belated filing shall not adversely affect rights of any other intervening creditors of the company.

7. Verification of every instrument evidencing any creation or modification of charge, where the instrument or deed relates solely to the property situated outside India, the copy shall be verified by a certificate issued either under the seal of the company, or under the hand of any director or company secretary of the company or an authorised officer of the charge holder or under the hand of some person other than the company who is interested in the mortgage or charge.

8. Verification of every instrument evidencing any creation or modification of charge, where the instrument or deed relates, whether wholly or partly, to the property situated in India, the copy shall be verified by a certificate issued under the hand of any director or company secretary of the company or an authorised officer of the charge holder.

9. Where a charge is registered with the Registrar obtain a certificate of registration of such charge in Form No.CHG2. Where the particulars of modification of charge is 2 registered the Registrar shall issue a certificate of modification of charge in Form No. CHG-3.

10. A company shall within a period of thirty days from the date of the payment or satisfaction in full of any charge registered, give intimation of the same to the Registrar in Form No.CHG-4 along with the fee as prescribed in with -4 Annexure ‘B’ of Companies (Registration offices and fees) Rules, 2014.

11. Where the Registrar enters a memorandum of satisfaction of charge in full obtain a certificate of registration of satisfaction of charge in Form No.CHG-5.

12. Incorporate changes in relation to creation, modification and satisfaction of charge in the register of charges maintained by the company in Form No. CHG.7 and m No. CHG.7 enter therein particulars of all the charges registered with the Registrar on any of the property, assets or undertaking of the company and the particulars of any property acquired subject to a charge as well as particulars of any modification of a charge and satisfaction of charge. Such register is to be kept at its registered office of the company.

13. All the entries in the register shall be authenticated by a director or the secretary of the company or any other person authorised by the Board for the purpose.

14. The register of charges shall be preserved permanently and the instrument creating a charge or modification thereon shall be preserved for a period of eight years from the date of satisfaction of charge by the company.

15. Where the satisfaction of the charge is not filed with the Registrar within thirty days from the date on such payment of satisfaction, an application for condonation of delay shall be filed with the Central Government in Form No.CHG-8 along with the fee as prescribed in with Annexure ‘B’ of Companies (Registration offices and fees) Rules, 2014.

16. Where the instrument creating or modifying a charge is not filed with the Registrar within a period of three hundred days from the date of its creation (including acquisition of a property subject to a charge) or modification an application for condonation of delay shall be filed with the Central Government in Form No.CHG-8 along with the -8 fee as prescribed in with Annexure ‘B’ of Companies (Registration offices and fees) Rules, 2014.

17. The order passed by the Central Government shall be required to be filed with the Registrar in Form No.INC.28 along with the fee as per the conditions stipulated in the said order.

18. For all other matters other than condonation of delay, application shall be made to the Central government in Form No.CHG-8 along with the fee.