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CS Executive · Company Law and Practice · Charges

Meridian Textiles Ltd, a company, creates a charge on its factory building and plant in Surat in favour of a bank. Under the Companies Act, 2013, on which assets can a company create a charge that must be registered with the Registrar?

A charge on any property, asset or undertaking of the company, tangible or otherwise and situated in or outside India, must be registered. The Act does not restrict the duty to immovable, tangible or Indian assets, so the broad wording applies.

  1. AOnly immovable property situated in India
  2. BOnly tangible assets situated in India
  3. CIts property, assets or undertakings, whether tangible or otherwise, situated in or outside IndiaCorrect
  4. DOnly assets that are held in the company's registered office state

Explanation

Section 77(1) makes it the company's duty to register a charge created within or outside India on its property, assets or any undertakings, whether tangible or otherwise, situated in or outside India. Options limiting the charge to immovable, tangible or Indian assets restate a narrower rule than the Act.

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