CA Intermediate · Corporate and Other Laws

Registration of Charges: CA Intermediate Corporate and Other Laws

A charge is security a company gives over its property or assets to a lender. Under Section 77, the company must register its particulars with the Registrar within thirty days of creation. Solve questions by finding the creation date, counting the days, and applying the extensions and the consequences of non-registration.

What this chapter covers

This chapter covers how a company's security over its property becomes visible to the public. A charge is created when a company gives its assets as security for a loan. Sections 77 to 87 of the Companies Act, 2013 then tell you who must register it, with whom, by when, and what happens if the company does not.

The chapter has a clear flow. First you learn what a charge is and its types, including mortgage basics. Then you learn the duty to register under Section 77. Then the fallback when the company fails: the charge-holder's own application under Section 78. Then Section 79 (property acquired subject to a charge, and modification of a registered charge), Section 82 and 83 (satisfaction), Section 84 (receiver or manager), Section 85 (company's register), Section 81 (Registrar's register) and Section 87 (rectification). Section 384 applies the same chapter to foreign companies.

It links to other parts of the paper. Debentures and borrowing powers lead naturally into charges. The penalty rules link to Section 446B on lesser penalties for small companies, one person companies, start-up companies and producer companies. The chapter is mostly about time limits and consequences, so it suits both MCQs and short case-based answers.

This chapter is compact, rule-based and predictable. Most questions turn on a few numbers (thirty days, sixty days, a further sixty days, three hundred days, fourteen days) and a few consequences, so a student who learns them cleanly can score full marks in both MCQs and written answers. The facts in a case-based question are usually simple: a creation date, a lender and a missed deadline. If you apply the provision, facts and conclusion format, you earn step marks even when the arithmetic is the only hard part.

Registration of Charges: topics in the order to study them

1Charge: Meaning, Types and Mortgage BasicsYou need the meaning of a charge and the idea of security before any registration rule makes sense.
2Registration of Charges under Section 77This is the core duty and the time limits; every later topic builds on it.
3Charges Requiring Registration and Section 78-79Once you know the company's duty, study what happens when it fails (Section 78) and which events also need registration (Section 79).
4Modification, Satisfaction and Register of ChargesThis covers the life of a charge after registration: payment, release, receiver notices and the two registers.
5Consequences of Non-Registration and PenaltiesStudy this last, because it ties the earlier rules together and is where most case-based questions end.

How to prepare Registration of Charges

This chapter is short, so you can finish it in a few focused sittings. Spend your time on time limits and consequences, not on long theory.

Read the meaning of a charge and the basic types, and write one line on how a charge differs from a plain unsecured loan.
Make a timeline for Section 77: creation, then thirty days for normal registration, then up to sixty days from creation if the Registrar allows it on the company's application with additional fees. If registration is still not made within that sixty days, the Registrar may, on application, allow a further period of sixty days after payment of ad valorem fees. This further period is not automatic, and it follows the first sixty days rather than being counted afresh from creation. Practise counting from a given creation date.
Learn who can act: the company under Section 77, the charge-holder under Section 78, and the Registrar under Section 83. Write each in one line.
List what Section 79 adds: property acquired subject to a charge, and modification of a registered charge, both treated like Section 77.
Learn satisfaction: intimation within thirty days under Section 82, extension to three hundred days of the payment or satisfaction, the fourteen-day show-cause notice, and the memorandum of satisfaction.
Solve several case-based questions in the provision, facts and conclusion format, then attempt MCQs on the numbers. There is no negative marking, so always attempt every MCQ.

Common mistakes in Registration of Charges

Mixing up the thirty, sixty and further sixty day periods.
Fix: Draw a timeline. Day 0 is creation. Day 30 is the normal deadline. Day 60 from creation is the end of the period the Registrar may allow on the company's application with additional fees. If registration is still not made within those sixty days, the Registrar may, on application, allow a further sixty days on ad valorem fees. That further period is discretionary and follows the first sixty days; do not treat it as a separate period counted again from creation. Practise with a real creation date.
Saying a lender loses the money if the charge is not registered.
Fix: State both parts: the charge is not taken into account by the liquidator or other creditors, but the contract for repayment is not prejudiced under Section 77(4).
Confusing who may apply for late registration.
Fix: Remember that Section 77 extensions are on the company's application, while Section 78 lets the charge-holder apply when the company fails.
Mixing up registration of a charge with intimation of its satisfaction.
Fix: Keep two lists. Section 77 is creation, with an extension to sixty days from creation and, if that is missed, a further sixty days on application and ad valorem fees. Section 82 is satisfaction, with an extension to three hundred days of the payment or satisfaction.
Writing a conclusion without applying the facts.
Fix: Use provision, facts and conclusion. State the rule, count the days from the given dates, and then say clearly whether the charge is registrable and how.
Forgetting the lesser penalty rule for small and similar companies.
Fix: Note that for a one person company, small company, start-up company or producer company, the penalty is at most one-half of the stated penalty, capped at two lakh rupees for the company and one lakh rupees for an officer in default.

Last-day revision: Registration of Charges

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.

Registration of Charges practice questions

Registration of Charges in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Registration of Charges: frequently asked questions

What is the time limit to register a charge?

The company must register the charge particulars with the Registrar within thirty days of creation. The Registrar may allow up to sixty days from 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 a further sixty days on payment of ad valorem fees.

What happens if a charge is not registered?

An unregistered charge is not taken into account by the liquidator or any other creditor. However, the contract or obligation to repay the secured money is not affected. The charge-holder can also apply to the Registrar under Section 78.

Who can apply for registration if the company fails to do so?

The person in whose favour the charge is created may apply to the Registrar, without prejudice to the company's liability for the offence. After giving notice to the company, the Registrar may within fourteen days allow registration, unless the company itself registers the charge or shows sufficient cause why it should not be registered. The charge-holder can recover the fees he paid from the company.

Do I need to report repayment of a registered charge?

Yes. Under Section 82 the company must intimate the Registrar of 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 the intimation within three hundred days of the payment or satisfaction.

Does this chapter apply to foreign companies?

Yes. Section 384(4) applies the provisions of the charges chapter mutatis mutandis to charges on properties created or acquired by a foreign company.