Registration of Charges: formula sheet

Key formulas

Meaning of charge (section 77 wording)

Charge = security interest on a company's property, assets or undertakings, tangible or otherwise, in or outside India

Quote 'tangible or otherwise' and 'within or outside India'. It shows the wide scope.

Fixed vs floating

Fixed charge = specific, ascertained asset | Floating charge = changing class of assets, crystallises on default or winding up

Under a floating charge the company can deal with assets in the ordinary course until crystallisation.

Section 332 test

Floating charge created within 12 months before winding up starts = invalid, unless company proved solvent immediately after creation

Even if invalid, it stands for cash paid to the company at or after creation, in consideration for the charge, plus interest at 5% p.a. or a notified rate.

Possession and ownership table in words

Mortgage: immovable property, interest transferred, possession usually with borrower | Hypothecation: movables, borrower keeps possession | Pledge: movables, possession delivered to lender | Lien: right to retain goods till payment

Use possession and type of property as your quick differentiators. Mortgage, hypothecation and floating charges are the typical registrable charges.

Duty to register

Company creating a charge → file particulars + instrument with Registrar within 30 days of creation

Applies to charges within or outside India, on property or assets or undertaking, tangible or otherwise, in or outside India. Particulars are signed by company and charge-holder.

Extended time (charges created on or after the 2019 Amendment)

Day 1–30: normal. Day 31–60: on Registrar's allowance, additional fees. Day 61–120: further 60 days, on application, ad valorem fees

Further 60 days is allowed by the Registrar on application after payment of ad valorem fees as prescribed.

Older charges

Charges created before commencement of the Companies (Amendment) Act, 2019: up to 300 days from creation

This is the first proviso clause (a). Do not apply it to new charges.

Certificate of registration

Registered under s.77(1) → Registrar issues certificate to company and charge-holder (s.77(2))

Certificate is needed along with registration for the charge to be recognised.

Effect of non-registration

Unregistered charge → not taken into account by liquidator or any other creditor (s.77(3)); repayment obligation survives (s.77(4))

Section 77(4) preserves the contract or obligation to repay the money secured. Only the charge is affected.

Subsequent registration

Late registration does not prejudice rights acquired in the property before the charge is actually registered

Third proviso to s.77(1).

Condonation

Central Government may condone delay in filing a document with the Registrar, for reasons recorded in writing (s.460)

A residual power for delay beyond the time the Registrar can allow.

Application by charge-holder (s.78)

If company fails to register, the person in whose favour the charge is created may apply to the Registrar; Registrar decides within 14 days after giving notice to the company

The charge-holder may recover the fees he paid from the company.

Duty to register (Section 77(1))

Company creating a charge → register particulars + instrument with Registrar within 30 days of creation

Applies to charges within or outside India, on property, assets or undertakings, tangible or otherwise, situated in or outside India.

Delay allowed on company's application (Section 77, provisos)

Charge created on or after commencement of the Companies (Amendment) Act, 2019: within 60 days of creation, on additional fees; if not done, a further 60 days on application, on ad valorem fees

The Registrar acts only on application and on payment of the fees. Adding the periods from creation gives day 120 (60 + 60), but treat that as arithmetic, not as a fixed cap stated in the Act.

Registration by charge-holder (Section 78)

Company fails → charge-holder applies → Registrar gives notice → Registrar may allow registration within 14 days after notice

The Registrar may allow registration unless the company registers it itself or shows sufficient cause why it should not be registered. The 14 days are his decision period, not a guarantee.

Recovery of fees (Section 78, proviso)

Charge-holder pays fees → can recover them from the company

Applies where registration is effected on the charge-holder's application.

Extension of Section 77 (Section 79)

Section 77 applies, so far as may be, to (a) property acquired subject to a charge and (b) modification of a registered charge

Covers changes in terms, conditions, extent or operation of the charge.

Effect of non-registration (Section 77(3) and (4))

Unregistered charge is not taken into account by liquidator or any other creditor; repayment obligation remains

A certificate of registration under Section 77(2) is needed.

Condonation of delay (Section 460)

Central Government may condone delay in filing documents with the Registrar, for reasons recorded in writing

Applies notwithstanding anything in the Act.

Notice of charge (Section 80)

Charge registered → any person acquiring the property or an interest in it is deemed to have notice from the date of registration

This is the notice requirement the registration creates.

Modification of charge

Section 79: section 77 applies, so far as may be, to modification of a registered charge and to acquiring property subject to a charge

Registration of the modification follows the same route as a fresh charge. Form CHG-1 is used in practice.

Satisfaction of charge: time limit

Section 82(1): intimation to Registrar within 30 days of payment or satisfaction in full; extendable up to 300 days by Registrar on application with additional fees

The 300 days run from the date of payment or satisfaction. The Registrar allows it on application by the company or the charge holder.

Registrar's procedure on intimation

Section 82(2)-(3): notice to charge holder, cause within time not exceeding 14 days; no cause, memorandum of satisfaction entered; cause shown, note recorded

Notice is not needed if the intimation is in the specified form and signed by the charge holder.

Registrar's own power

Section 83: entry of satisfaction or release, in whole or in part, on evidence, even without company intimation; inform affected parties within 30 days

Covers part payment and part release of property too. Section 82(4) preserves this power.

Rectification

Section 87: Central Government may extend time or rectify omission or misstatement if accidental, inadvertent, other sufficient cause, or not prejudicial to creditors or shareholders

Application can be by the company or any person interested, on terms the Government thinks just. It does not itself remove liability for default under section 86.

Register of charges

Section 85: kept at registered office; copy of instrument kept along with it; free inspection for members and creditors; others on prescribed fee

The register includes all charges and floating charges affecting any property or assets of the company or any of its undertakings.

Penalty

Section 86(1): company ₹5,00,000; every officer in default ₹50,000. Section 86(2): false or suppressed information leads to section 447

The penalty applies to default in complying with any provision of the Chapter.

Effect of non-registration

Charge not registered + no certificate of registration ⇒ not taken into account by liquidator or any other creditor (Section 77(3))

Both conditions matter: due registration and a certificate issued by the Registrar.

Debt not affected

Section 77(4): contract or obligation to repay the secured money is not prejudiced

The lender remains an unsecured creditor for the debt; it can still claim repayment.

Time limits for registration

Normal: within 30 days of creation. Charges created on or after commencement of the 2019 Amendment: Registrar may allow registration within 60 days of creation, on application and additional fees. If still not done, Registrar may, on a further application, allow registration within a further 60 days, on ad valorem fees. Charges created before that commencement: 300 days of creation.

Each extension needs an application to the Registrar and payment of the prescribed fees. The 300-day period applies only to older charges, not to charges created on or after the 2019 Amendment.

Penalty for default (Section 86(1))

Default in complying with any provision of the Chapter (including non-registration of a charge). Company: ₹5,00,000. Every officer in default: ₹50,000

These are the standard amounts. Section 446B can reduce them for One Person Companies, small companies, start-up companies and Producer Companies.

False information (Section 86(2))

Willful false or incorrect information, or knowing suppression of material information ⇒ action under Section 447

This applies to information required to be registered under Section 77.

Notice of charge (Section 80)

Deemed notice from the date of registration

Applies to anyone acquiring the property, assets, undertaking, part of it, or a share or interest in it.

Subsequent registration (third proviso to Section 77(1))

Subsequent registration does not prejudice rights acquired in the property before the charge is actually registered

Rights of persons who acquired interest before registration are protected.

Section 79

Section 77 applies to (a) a company acquiring property subject to a charge and (b) any modification of a registered charge

The wording is 'so far as may be'.

Reduced penalty (Section 446B)

Not more than one-half of the specified penalty, subject to a maximum of ₹2,00,000 for the company and ₹1,00,000 for an officer in default or other person

For One Person Company, small company, start-up company or Producer Company.

Quick revision

• A company creating a charge must register its particulars with the Registrar within thirty days of creation (Section 77).
• On the company's application, the Registrar may allow registration within sixty days of creation for charges created on or after the Companies (Amendment) Act, 2019, on additional fees.
• If registration is not made within those sixty days, the Registrar may, on application, allow registration within a further sixty days on payment of ad valorem fees.
• Later registration does not prejudice rights acquired in the property before the charge is actually registered.
• The Registrar issues a certificate of registration; an unregistered charge is not taken into account by the liquidator or any other creditor.
• The debt itself stays recoverable: non-registration does not defeat the contract to repay the money secured (Section 77(4)).
• If the company fails to register, the charge-holder may apply to the Registrar (Section 78) and can recover the fees he paid from the company.
• Section 79: Section 77 applies to property acquired subject to a charge and to modification of a registered charge.
• Section 82: the company must report payment or satisfaction in full within thirty days; on application by the company or the charge holder and payment of additional fees, the Registrar may allow intimation within three hundred days of the payment or satisfaction.
• Section 84: a person who obtains an order for the appointment of a receiver or manager of charged property, or who makes such an appointment under an instrument, must give notice to the company and the Registrar, with a copy of the order or instrument, within thirty days of the order or appointment.
• Section 85: the company keeps a register of charges at its registered office, open to members and creditors free of fees.
• Section 87: the Central Government may rectify omissions or misstatements that were accidental, inadvertent or otherwise for sufficient cause.

Common mistakes

• Saying a floating charge stops the company from dealing with its assets. Fix: Remember that the company can deal in the ordinary course until crystallisation.
• Treating charge and mortgage as the same thing. Fix: Charge is the wider term. Mortgage is one way of creating a charge, and it applies to immovable property.
• Applying the 300-day limit to every charge Fix: For charges created on or after the commencement of the Companies (Amendment) Act, 2019, use 30 days, then 60 days, then a further 60 days. Use 300 days only for older charges.
• Saying the charge-holder must register the charge Fix: Section 77(1) puts the duty on the company. The charge-holder may apply under section 78 only if the company fails.
• Saying the charge-holder has the primary duty to register under Section 77. Fix: Section 77(1) puts the duty on the company. Section 78 lets the charge-holder step in only when the company fails.
• Treating Section 79 as a separate registration procedure. Fix: Section 79 only extends Section 77, so far as may be, to property acquired subject to a charge and to modification of a registered charge.
• Saying satisfaction must be reported within 300 days as the normal rule. Fix: The rule is 30 days from payment. The 300 days is only with the Registrar's permission on application, with additional fees.
• Counting the 30 days from the date the charge was created. Fix: For satisfaction, count from the date of payment or satisfaction in full.
• Saying the loan becomes invalid or need not be repaid when the charge is not registered. Fix: Quote Section 77(4): the contract or obligation to repay the secured money is not prejudiced. Only the security is affected.
• Mixing up the company's penalty and the officer's penalty. Fix: Write it as: company ₹5,00,000; officer in default ₹50,000 each.

Exam tips

• For difference questions, draw a short two-column list with 4 to 5 points. Use possession, ownership, type of property and right to sell.
• Quote the section 77 phrase 'tangible or otherwise' to show you know the definition's scope.
• Whenever floating charge and winding up appear together, think section 332 and write its three conditions plus the cash-and-interest exception.
• In MCQs, label the arrangement by asking whether the property is movable or immovable and who holds possession.
• Link the answer to registration in one closing line, naming mortgage, hypothecation or floating charge as the registrable charges under section 77.
• Always write the creation date and count the days. Examiners reward the day count.
• Quote the sub-section: 77(1) duty, 77(2) certificate, 77(3) effect, 77(4) repayment saved.
• RTP and MTP questions often ask who can apply when the company fails. Answer with section 78: the charge-holder may apply whenever the company fails to register within the section 77 period, the Registrar decides within 14 days after notice to the company, and the charge-holder can recover the fees he paid from the company.