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CA Intermediate · Corporate and Other Laws · Registration of Charges

Sunrise Textiles Ltd. created a charge on its factory building in favour of Canara Bank on 1 April to secure a term loan. The company did not file the particulars of the charge with the Registrar within the initial period of 30 days. Which statement correctly describes the position under the Companies Act, 2013?

A charge not registered within 30 days of creation can still be registered within the next 300 days on payment of additional fees. It does not become void immediately, and private companies are not exempt from registering charges.

  1. AThe charge becomes void automatically and the bank can never register it
  2. BThe charge can be registered within a further period of 300 days from creation on payment of additional feesCorrect
  3. CThe charge can be registered at any time later without any limit, on payment of a penalty
  4. DThe charge needs no registration because the company is a private company

Explanation

The particulars of a charge must be filed within 30 days of creation. If missed, the Registrar may allow registration within a further 300 days on payment of additional fees. The option saying it is automatically void is wrong, since the extended window exists. Beyond that period, condonation is only through the Central Government route.

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