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CA Intermediate · Corporate and Other Laws · Registration of Charges

Orion Steels Ltd. created a charge on its assets and the particulars were registered. Later, Orion and the charge holder, Lakshmi Finance, agreed to modify the terms by increasing the rate of interest. Which of the following is the correct position regarding this modification under the Companies Act, 2013?

Particulars of the modification of a registered charge must be filed with the Registrar within 30 days of the modification, with a possible further 300 days on payment of additional fees. A modified charge does not require fresh creation, but the change must be registered for it to be effective against creditors.

  1. ANo filing is needed as modification of terms is a private matter
  2. BParticulars of the modification must be filed with the Registrar within 30 days, and the Registrar may allow a further 300 daysCorrect
  3. CThe charge must be released and a fresh charge created
  4. DOnly the charge holder need notify the Registrar within 60 days

Explanation

Section 79 provides that modification of a registered charge requires particulars to be filed with the Registrar in the prescribed manner within 30 days of the modification, with a further 300-day allowance under Section 78. Option A is wrong, since modification must be registered. Option C is unnecessary. Option D gives an incorrect period and party.

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