CS Executive · Company Law and Practice

Charges under the Companies Act, 2013: CS Executive Study Guide

A **charge** is a security interest a company creates on its property or assets to secure a debt. The company must register its particulars with the Registrar within 30 days of creation (Section 77). Unregistered charges are ignored by the liquidator and other creditors. Learn timelines, filings and registers, then write provision, facts, conclusion.

What this chapter covers

This chapter covers how a company secures borrowings by creating charges on its assets, and how the law makes those charges public. The core idea is simple. A lender who takes security wants priority. Other creditors and the public want to know which assets are already encumbered. Registration with the Registrar of Companies serves both needs.

The chapter has four moving parts. First, what a charge is and its types, such as fixed and floating. Second, registration under Section 77: who must register, within what time, and the effect of not registering. Third, later events: modification of a charge, acquiring property that is already charged (Section 79), and payment or satisfaction (Sections 82, 83 and 87). Fourth, the registers: the one kept by the Registrar (Section 81) and the one kept by the company at its registered office (Section 85).

The chapter links to other parts of Paper 2. It connects with borrowing powers, debentures and the powers of the board, and with company administration and filings. It also touches winding up and insolvency, because Section 77(3) decides whether a charge counts before a liquidator. Section 384 extends the charge provisions to foreign companies, and Section 398 allows filing in electronic form.

Charges is a compact chapter with a small set of sections and many fixed numbers, so it rewards careful learning. Questions are usually short-answer or case-based: a company created a charge on a date, when must it register, and what happens if it is late? If you know the timelines and the consequence of non-registration, you can write a full answer in a few lines. Marks are lost mainly by mixing up periods such as 30, 60, 300 and 14 days, not by lack of difficulty.

Charges: topics in the order to study them

1Meaning and Types of ChargesYou need the concept of a charge, and the fixed and floating types, before any section makes sense.
2Registration of Charges with the Registrar (Section 77)This is the core section, with the duty, time limits and the effect of non-registration, so give it the most time.
3Modification, Satisfaction and Related FilingsThese sections follow the life of a charge after registration, so they build on Section 77 and reuse its timelines.
4Register of Charges and Inspection (Sections 81 and 85)Study the two registers last, once you know what gets recorded and why, and compare who keeps each and who can inspect.

How to prepare Charges

Treat this chapter as a timeline you can replay from memory: creation, registration, change, payment, record. Build it in this order.

Read the meaning of a charge and the fixed and floating types, and write one example of each using an Indian company and a bank loan.
Learn Section 77(1) closely: the duty lies on the company, the particulars are signed by the company and the charge-holder, and the filing goes to the Registrar within 30 days of creation.
Write the extended periods in a small table of your own: up to 60 days on application with additional fees, then a further 60 days on application with ad valorem fees, for charges created on or after the 2019 Amendment commencement.
Learn the consequences: the Registrar issues a certificate of registration (Section 77(2)); without registration and certificate, the liquidator or any other creditor does not take the charge into account (Section 77(3)); the debt itself is still repayable (Section 77(4)).
Study Sections 79, 82, 83 and 87 as one block: modification and acquired charged property, satisfaction intimation within 30 days (extendable to 300 days), the Registrar's own power to enter satisfaction, and rectification by the Central Government.
Compare Section 81 and Section 85 side by side: who keeps the register, where, and who may inspect with or without fees.
Practise three or four case questions in ICSI style: state the provision, apply it to the dates in the facts, and end with a clear conclusion citing the section.

Common mistakes in Charges

Saying an unregistered charge is void for all purposes, including the debt.
Fix: Write that the charge is not taken into account by the liquidator or other creditors, but the contract or obligation to repay the money secured is not prejudiced.
Mixing up the 30-day, 60-day and 300-day periods.
Fix: Attach each period to its event: 30 days to register a charge, up to 60 plus 60 days for late registration, and 300 days only for late intimation of satisfaction (and for old pre-Amendment charges).
Treating registration as the lender's duty.
Fix: Section 77(1) puts the duty on the company. Note that the particulars are signed by both the company and the charge-holder.
Confusing the Registrar's register (Section 81) with the company's register (Section 85).
Fix: Remember who keeps it and who inspects. Section 85: kept at the registered office with a copy of the instrument, free for members and creditors. Section 81: kept by the Registrar, open to any person on fee.
Ignoring who can act on satisfaction and rectification.
Fix: Add Section 83, where the Registrar can enter satisfaction without company intimation, and Section 87, where the Central Government can extend time or rectify omissions that were accidental, inadvertent or not prejudicial.
Writing answers without a conclusion or section number.
Fix: Use three parts: the provision with its section, the analysis using the dates given, and a one-line conclusion on whether the charge was validly registered.

Last-day revision: Charges

A charge is security created on the company's property or assets to secure a debt.
Section 77 applies to charges created within or outside India, on assets situated in or outside India.
The company must file particulars, signed by the company and the charge-holder, with the Registrar within 30 days of creation.
Late filing: Registrar may allow up to 60 days on application with additional fees, for charges created on or after the 2019 Amendment commencement.
A further 60 days may be allowed on application, on payment of ad valorem fees.
Late registration does not prejudice rights acquired in the property before the charge was actually registered.
The Registrar issues a certificate of registration to the company and to the person in whose favour the charge is created.
An unregistered charge is not taken into account by the liquidator or any other creditor, but the repayment obligation stays valid.
Section 79 applies Section 77 to acquiring property subject to a charge and to modification of a registered charge.
Section 82: intimate payment or satisfaction in full within 30 days; Registrar may allow up to 300 days on application with additional fees.
Under Section 82, the Registrar sends a show-cause notice to the charge-holder with a time of not more than 14 days, unless the form is signed by the holder.
Section 81: Registrar keeps the register, open to inspection by anyone on fee. Section 85: company keeps its register at the registered office, open to members and creditors free.

Charges practice questions

Charges in other exams

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

Charges: frequently asked questions

What is the time limit to register a charge under Section 77?

The company must register the particulars with the Registrar within 30 days of creation. For charges created on or after the commencement of the Companies (Amendment) Act, 2019, the Registrar may allow registration within 60 days on application and additional fees, and then a further 60 days on application and ad valorem fees.

What happens if a charge is not registered?

Under Section 77(3), the liquidator and other creditors do not take the charge into account unless it is registered and a certificate of registration is issued. The company's obligation to repay the secured money remains valid under Section 77(4).

Who can inspect the register of charges kept by the company?

Under Section 85, any member or creditor can inspect it during business hours without paying fees. Any other person can do so on payment of the prescribed fees. This is subject to reasonable restrictions in the articles.

How is satisfaction of a charge recorded?

The company must intimate payment or satisfaction in full to the Registrar within 30 days, extendable up to 300 days on application with additional fees. The Registrar then notifies the charge-holder to show cause within a period of up to 14 days, and enters a memorandum of satisfaction if no cause is shown. The Registrar can also enter satisfaction on his own under Section 83 when satisfied by evidence.