A charge is a legal claim made by anyone, basically is a form of interest filed over the asset or property of a company. Read this blog to understand the topic better.
As per the Companies Act 2013 the term charge is defined as interest or it could be said lien on the property, assets, undertaking or any other security of the company including mortgage. Therefore it could be said that for the purpose of securing companies’ lent the charge is a type of security created. It could be fixed in case of charges against any fixed property of the company for instance land, building. In case of changing assets the floating charges are created such as cash receivables.
Every corporation is required to file precise charges made against its assets with the Registrar of Companies. Registration of charges serves as a public notice of the extent to which the firm’s property is encumbered to those who are considering lending the company money. Companies are required by the Companies Act to file charge particulars within 30 days of the charge’s inception; otherwise, the charge is void against the company’s creditors and liquidators.
Creation and Satisfaction of Charges
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Registration of Charges
Every company that has created a charge is required by the Companies Act of 2013 to maintain a record of charges at the registered office of the company in the appropriate format. A must, that is.
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Registration certificate
The individual in whose favour the charge is created receives a certificate of registration of charge from the Registrar of Companies when the charge is created and lodged with the Registrar. The certificate of registration is what it is called.
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Non-Registration scenario
According to the Companies Act of 2013, failing to register a charge exposes the company and its officers to fines and other sanctions.
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Charge Modification
The corporation must file for modification of the charge if the terms, circumstances, extent, or operation of a charge created
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Charge Satisfaction
The corporation is required to notify the Registrar when a charge placed against one of its properties or assets has been fully fulfilled. It is considered the prime duty of corporations to inform such details.
Identity and Address Proof
All directors and shareholders of the incorporated firm will need to provide documentation of their identities and addresses. PAN is required for Indian nationals. A copy of the passport that has been apostil led or notarised must be submitted for international nationals. All supplied documents must be legitimate. A bank statement or an electricity bill that serves as proof of residence must be no older than two months.
Registered Office Proof
All businesses are required to have an Indian registered office. A current copy of an electricity bill, property tax receipt, or water bill must be given to demonstrate access to the registered office. A letter from the landlord granting permission to use the space as a registered office of a firm must also be submitted, together with the utility bill, leasing agreement or sale title, and other documents.
Pricing
Simple and transparent pricing policies are followed here. The pricing is bifurcated into three categories-
- Basic fee for the filing for registration of charges included GST- ₹4899
- Standard fee purpose of filing the modification of existing charge included GST- ₹7899
- Premium fee for the filing for satisfaction of charge included all other fees and GST- ₹12899.
Process of Charge Creation & Satisfaction
The procedure to be followed is as follows for the purpose of creating charges and satisfying them:
Engagement Advisory– A Business Expert will evaluate the loan documents and the Articles of Association to understand the background of the Company before the process is started. The review would take one to three business days.
Board Resolutions: After you have a basic understanding of the charge management procedures, our experts will develop the relevant Board Resolutions.
Registration, modification, or satisfaction of the charge will be completed following the filing of the required paperwork with the Ministry of Corporate Affairs by our Experts after the Board Resolutions have been approved.
Conclusion
A charge is a legal claim made by anyone, including a business known as “the borrower,” in favour of a financial institution or bank known as “the lender,” which has promised to provide financial support, on all of the borrower’s assets and properties, both current and future. These charges are filed under three categories of pricing as per the analysis-basic, standard and premium pricing. Further identity and address proof are must for such creation and satisfaction of charges. Valiksearch provides with the more in-depth knowledge and assistance regarding the charge creation process in India.
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