Charge Registration: CHG-1 Filing, Modification & Satisfaction Under Companies Act 2013

When a company borrows money and pledges its assets as security, a charge is created. The Companies Act 2013 mandates that every such charge must be registered with the Registrar of Companies (ROC) to protect the interests of lenders and ensure transparency. Failure to register a charge within the prescribed time can attract penalties, render the charge void against the liquidator, and expose directors to prosecution.

This comprehensive guide by CA V. Viswanathan, IBBI Registered Valuer (Reg. No. IBBI/RV/03/2019/12333), covers the entire lifecycle of charge registration — from creation and filing of CHG-1, through modification via CHG-4, to satisfaction through CHG-6 — along with CERSAI requirements, penalties under Section 86, and the condonation of delay mechanism.

Featured Answer: A charge is an interest or lien created on the assets of a company as security for a debt. Under Section 77 of the Companies Act 2013, every company creating or modifying a charge on its property or assets must register the particulars of the charge with the ROC by filing Form CHG-1 (for charges other than debentures) or Form CHG-9 (for debentures) within 30 days of the date of creation or modification of the charge. Late filing attracts additional fees and may require condonation of delay from the Central Government.

1. What Constitutes a Charge Under the Companies Act 2013?

Definition: Section 2(16) of the Companies Act 2013 defines a charge as an interest or lien created on the property or assets of a company or any of its undertakings or both, as security, and includes a mortgage. In essence, a charge is a right granted by a borrower (the company) to a lender (the charge holder) over specified assets to secure repayment of a debt or obligation.

The key elements that constitute a charge are:

Existence of a debt or obligation: There must be an underlying loan, debenture, or financial obligation that necessitates the creation of security.
Property or assets of the company: The charge must be created over identifiable assets — whether tangible (land, machinery, stock) or intangible (book debts, intellectual property, goodwill).
Security interest: The charge grants the lender a preferential right over the encumbered assets in the event of default or liquidation.
Creation by agreement: A charge is typically created through a written instrument such as a mortgage deed, hypothecation agreement, or pledge agreement.

It is important to note that not all security interests are charges. A lien (possessory or statutory) and a set-off are generally not treated as charges requiring registration, although the distinction can be nuanced. Companies should seek professional advice from a qualified Company Secretary to determine whether a particular transaction creates a registrable charge.

2. Types of Charges: Fixed, Floating & Pledge

Understanding the different types of charges is essential for proper registration and for determining the priority of claims in the event of liquidation.

2.1 Fixed Charge (Specific Charge)

A fixed charge is created over specific, identifiable assets of the company. The asset subject to a fixed charge cannot be dealt with freely by the company without the consent of the charge holder. Common examples include:

Mortgage over immovable property (land and buildings)
Charge over specific machinery or equipment
Charge over intellectual property rights (patents, trademarks)
Assignment of specific book debts or receivables

A fixed charge gives the lender a high degree of security because the asset is earmarked and cannot be dissipated by the borrower.

2.2 Floating Charge

A floating charge is created over a class of assets that are not specifically identified and may change from time to time in the ordinary course of business. The charge “floats” over the assets until a triggering event — known as crystallisation — converts it into a fixed charge. Crystallisation occurs upon:

Default by the borrower
Winding up of the company
Appointment of a receiver or manager
Notice by the lender to crystallise

Floating charges are commonly created over current assets such as stock-in-trade, raw materials, work-in-progress, and general book debts. They offer flexibility to the borrower while providing a blanket security to the lender.

2.3 Pledge

A pledge involves the delivery of possession of goods or documents of title to the lender as security for a debt. While a pledge is technically governed by the Indian Contract Act 1872 (Sections 172-179), it is also treated as a form of charge under the Companies Act when created by a company. The distinguishing feature of a pledge is the transfer of possession — the pledgor (company) hands over the goods to the pledgee (lender), who holds them until the debt is repaid.

Pledges are commonly used for securing loans against gold, securities, or other movable goods. Unlike a hypothecation (where possession remains with the borrower), a pledge provides the lender with actual control over the collateral.

2.4 Other Forms of Security Interests

Additional forms of security that may constitute registrable charges include:

Hypothecation: A charge on movable assets where possession remains with the borrower (commonly used for vehicles, inventory, and receivables).
Mortgage: A transfer of interest in immovable property to secure a debt, governed by the Transfer of Property Act 1882.
Assignment: Transfer of rights in specific assets (such as insurance policies or receivables) to the lender as security.

3. Sections 77 to 87: The Legal Framework for Charge Registration

The registration of charges is governed by Sections 77 to 87 of the Companies Act 2013, read with the Companies (Registration of Charges) Rules, 2014. The key provisions are summarised below:

Section	Subject Matter	Key Provision
Section 77	Duty to register charges	Every company must register particulars of charge within 30 days of creation with ROC.
Section 78	Application by charge holder	If the company fails to register, the charge holder may apply for registration.
Section 79	Effect of non-registration	Unregistered charge is void against the liquidator and other creditors; debt remains payable.
Section 80	Company to report satisfaction	Company must intimate ROC of payment or satisfaction of charge.
Section 81	Intimation of appointment of receiver or manager	Any person obtaining an order for appointment must give notice to ROC within 30 days.
Section 82	Company to keep register of charges	Every company must maintain a register of charges at its registered office.
Section 83	Inspection of register of charges	Register and instruments creating charges are open to inspection.
Section 84	Intimation of charge to ROC	ROC shall issue certificate of registration of charge.
Section 85	ROC to maintain register of charges	ROC shall keep a register of charges for each company.
Section 86	Punishment for contravention	Penalties for failure to register charges — up to Rs. 10 lakh for company and Rs. 5 lakh for officers.
Section 87	Rectification by CG on company liquidation	Central Government may allow registration of charges even after the prescribed period.

4. CHG-1: Filing for Registration of Charge

Form CHG-1 is the prescribed form for registering the creation or modification of a charge (other than a charge related to debentures, which requires Form CHG-9). This form must be filed electronically on the MCA portal.

4.1 Timeline for Filing CHG-1

The timeline for filing Form CHG-1 is structured as follows:

Within 30 days of the date of creation of charge — normal filing with standard fees.
Beyond 30 days but within 60 days — filing is permitted with payment of additional fees (ad valorem fees based on the charge amount). No condonation application is required for this window.
Beyond 60 days but within 120 days — filing requires an application for condonation of delay to the Regional Director (RD), along with prescribed additional fees.
Beyond 120 days but within 300 days — filing requires condonation of delay from the Central Government (CG) under Section 87, subject to payment of further enhanced additional fees.
Beyond 300 days — the charge cannot be registered through the normal process. The company must approach the National Company Law Tribunal (NCLT) for relief.

4.2 Documents Required for CHG-1 Filing

The following documents are typically required to be attached with Form CHG-1:

Certified true copy of the instrument creating or modifying the charge (e.g., loan agreement, mortgage deed, hypothecation agreement)
Particulars of the charge in the prescribed format
Certificate from the charge holder regarding the amount of the charge
Board resolution authorising the creation of the charge
Valuation report of the assets, if applicable (for which IBBI-registered valuation services may be required)
No Objection Certificate (NOC) from existing charge holders, if applicable

4.3 Key Fields in Form CHG-1

While filling Form CHG-1, particular attention must be paid to:

Nature of the charge: Whether it is a mortgage, hypothecation, pledge, assignment, or other form of security interest.
Description of assets charged: A precise description of the property or assets over which the charge is created.
Amount secured: The total amount of the debt or obligation secured by the charge.
Terms and conditions: Any conditions or restrictions attached to the charge.
Details of the charge holder: Name, address, and other particulars of the lender or charge holder.
Joint charge details: If the charge is held jointly by multiple lenders (such as in consortium lending), details of all charge holders must be provided.

Expert Tip — CA V. Viswanathan: Companies often underestimate the importance of accurate asset description in CHG-1. A vague or incomplete description can lead to disputes about the extent of the charge during enforcement or liquidation. Always ensure that immovable properties are described with survey numbers, boundaries, and registration details, and that movable assets are identified with serial numbers, make, model, or other distinguishing particulars. This level of precision protects both the company and the charge holder.

5. Late Filing of CHG-1: Additional Fees & Condonation of Delay

The Companies Act recognises that delays in filing may occur for genuine reasons. Accordingly, a graded system of additional fees and condonation has been established.

5.1 Additional Fees for Delayed Filing

The additional fees payable for delayed filing of charge registration are prescribed under the Companies (Registration of Charges) Rules, 2014 and are calculated on an ad valorem basis. The fee structure increases progressively with the duration of the delay:

Up to 30 days: Normal filing fee — no additional fees.
Beyond 30 days up to 60 days: Additional fee of two times the normal fees.
Beyond 60 days up to 90 days: Additional fee of four times the normal fees (requires RD condonation).
Beyond 90 days up to 120 days: Additional fee of six times the normal fees (requires RD condonation).
Beyond 120 days up to 300 days: Additional fee of ten times the normal fees (requires CG condonation under Section 87).

5.2 Condonation of Delay by the Central Government

Under Section 87 of the Companies Act 2013, the Central Government has the power to condone the delay in registration of charges beyond the permissible period. The application for condonation must include:

A detailed explanation for the delay in registration
An affidavit from the directors confirming the facts and circumstances
Consent letter from the charge holder
Board resolution approving the application for condonation
Evidence that the charge was validly created (original instrument)
Payment of prescribed additional fees

The Central Government may, on being satisfied that the delay was accidental or due to inadvertence or other sufficient cause, direct that the time for registration shall be extended. Such extension is granted subject to conditions that the rights of any parties acquired during the intervening period are not prejudicially affected.

6. CHG-4: Modification of Charge

When the terms of an existing charge are altered — such as a change in the amount secured, the property charged, or the terms and conditions — the modification must be registered with the ROC by filing Form CHG-4.

6.1 When Is CHG-4 Required?

Form CHG-4 must be filed in the following circumstances:

Increase or decrease in the amount of the charge
Change in the property or assets subject to the charge (addition or release of collateral)
Change in the terms and conditions of the charge
Change in the charge holder (such as assignment of the loan to another lender)
Conversion of a floating charge to a fixed charge (crystallisation)
Modification pursuant to a restructuring, compromise, or arrangement under Sections 230-232 of the Companies Act

6.2 Timeline and Process for CHG-4

The timeline for filing Form CHG-4 mirrors that of CHG-1:

Must be filed within 30 days of the date of modification
Can be filed with additional fees up to 60 days
Beyond 60 days, condonation of delay is required

The documents to be attached include the certified copy of the instrument effecting the modification, the original certificate of registration of charge, and a board resolution authorising the modification.

7. CHG-6: Satisfaction of Charge

When the debt secured by a charge has been fully repaid or the charge has otherwise ceased to exist, the company is required to intimate the ROC by filing Form CHG-6 (previously known as Form CHG-4 for satisfaction under the old regime).

7.1 Importance of Filing CHG-6

Filing Form CHG-6 is crucial because:

It removes the encumbrance from the company’s records at ROC, thereby showing a clean asset position.
It enhances the company’s borrowing capacity by freeing up assets for fresh security creation.
It prevents confusion during due diligence by prospective lenders or investors.
Failure to file satisfaction may create complications during company winding up or strike-off proceedings.

7.2 Timeline and Process for CHG-6

Under Section 82 of the Companies Act 2013, the company must file Form CHG-6 within 30 days of the payment or satisfaction of the charge in full. The form requires:

Details of the charge being satisfied (charge ID, date of creation, charge holder)
Date of payment or satisfaction
No Dues Certificate or letter of satisfaction from the charge holder (lender)
Board resolution noting the satisfaction of charge

Upon filing, the ROC issues a notice to the charge holder, allowing them 14 days to raise objections. If no objection is received, the ROC records the memorandum of satisfaction.

Expert Tip — CA V. Viswanathan: Many companies neglect to file CHG-6 after repaying loans, resulting in “phantom charges” on their MCA records. This can severely impact the company’s ability to raise fresh funding, as new lenders conduct ROC searches and may decline to lend if existing charges appear unsatisfied. I strongly advise companies to maintain a charge register (as required under Section 82) and to file satisfaction promptly upon repayment. A periodic review of the charge register should be part of every company’s annual compliance calendar.

8. CERSAI Registration

In addition to registration with the ROC, certain charges must also be registered with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), established under Section 20 of the SARFAESI Act 2002.

8.1 When Is CERSAI Registration Required?

CERSAI registration is mandatory for:

Security interests created over immovable property by way of mortgage (equitable or registered)
Security interests created over hypothecation of plant and machinery, stocks, book debts, and other movable assets
Security interests created by way of assignment or securitisation of financial assets

CERSAI registration is required to be completed within 30 days from the date of creation or modification of the security interest. The registration must be done through the CERSAI portal.

8.2 Consequences of Non-Registration with CERSAI

Under Section 26E of the SARFAESI Act (inserted by Amendment Act 2016), a security interest that is not registered with CERSAI shall not be enforceable against any subsequent secured creditor who has registered their security interest with CERSAI. This means that an unregistered charge holder may lose priority to a later charge holder who has duly registered with CERSAI.

Additionally, failure to register with CERSAI within 30 days attracts a penalty of up to Rs. 5,000 per day of delay, subject to a maximum of Rs. 5 lakh.

8.3 Dual Registration: ROC and CERSAI

It is essential to understand that ROC registration under the Companies Act and CERSAI registration under the SARFAESI Act are independent and concurrent obligations. Filing with one does not excuse filing with the other. Companies must ensure timely compliance with both requirements to maintain the validity and enforceability of their charges.

9. Penalties Under Section 86 of the Companies Act 2013

Section 86 prescribes penalties for contravention of the provisions relating to registration of charges:

Defaulter	Penalty
Company	Fine not less than Rs. 1 lakh, which may extend to Rs. 10 lakh
Every officer in default (including directors)	Imprisonment up to 6 months OR fine not less than Rs. 25,000, which may extend to Rs. 5 lakh, OR both

The penalties under Section 86 apply to contraventions of Sections 77 to 80 (creation, modification, and satisfaction of charges) and Section 82 (maintenance of register of charges). These are compoundable offences and may be compounded by the Regional Director or the NCLT under Section 441 of the Companies Act.

It is important to note that under Section 79, if a charge is not registered within the prescribed time, the charge shall be void against the liquidator and any creditor of the company. However, this does not affect the underlying debt — the money secured by the charge remains payable. The consequence is that the lender loses its preferential status and becomes an unsecured creditor in the event of liquidation.

10. Practical Compliance Checklist for Companies

To ensure seamless compliance with charge registration requirements, companies should follow this checklist:

At the time of borrowing: Identify whether the transaction creates a registrable charge. Consult a qualified Company Secretary or Chartered Accountant.
Within 10 days of creation: Prepare the instrument creating the charge and obtain necessary board approvals.
Within 30 days: File Form CHG-1 or CHG-9 (for debentures) with the ROC on the MCA portal. Simultaneously, file CERSAI registration if applicable.
Obtain charge certificate: Upon successful filing, the ROC issues a certificate of registration of charge. File this safely.
Update internal records: Record the charge in the company’s Register of Charges maintained under Section 82.
On modification: File Form CHG-4 within 30 days of any modification to the charge terms.
On satisfaction: Obtain No Dues Certificate from the lender and file Form CHG-6 within 30 days of full repayment.
Annual review: Conduct a periodic review of all charges to ensure that records are up to date and that satisfied charges have been duly reported.

11. Role of the Company Secretary in Charge Management

The Company Secretary plays a pivotal role in the registration, modification, and satisfaction of charges. Key responsibilities include:

Advising the Board on compliance requirements under Sections 77-87
Ensuring timely preparation and filing of Forms CHG-1, CHG-4, and CHG-6
Maintaining the company’s Register of Charges under Section 82
Coordinating with lenders for obtaining No Dues Certificates and consent letters
Monitoring filing deadlines and escalating delays before the condonation window closes
Conducting annual audits of charge records to reconcile with ROC and CERSAI databases
Certifying compliance in the Board’s Report and Annual Return

For companies without an in-house Company Secretary, engaging a practising Company Secretary firm for charge management ensures that deadlines are met and penalties are avoided.

12. Recent Developments & Best Practices

The MCA has progressively digitised the charge registration process through the MCA21 Version 3 portal. Key developments include:

Electronic filing: All charge-related forms must be filed electronically with digital signatures.
Unique Charge Identification Number: Each charge registered is assigned a unique identification number for tracking purposes.
Integration with CERSAI: The MCA and CERSAI databases are being progressively integrated to facilitate seamless cross-verification.
STP (Straight Through Processing): Certain charge filings are now processed through STP, reducing the turnaround time for registration.

Best practices for companies include:

Maintaining a dedicated compliance calendar with charge filing deadlines
Appointing a single point of contact (SPOC) for charge-related compliance
Conducting quarterly reviews of the charge register
Engaging professional advisors for complex charge structures (such as consortium lending or securitisation)
Obtaining independent valuations of charged assets periodically

AEO Summary: Charge registration under the Companies Act 2013 is a critical compliance obligation. Every charge — whether fixed, floating, or by way of pledge — must be registered with the ROC by filing Form CHG-1 within 30 days. Modifications require CHG-4 and satisfactions require CHG-6, both within 30-day windows. Dual registration with CERSAI is mandatory for security interests over immovable and certain movable properties. Penalties under Section 86 can reach Rs. 10 lakh for the company and imprisonment for officers in default. Condonation of delay is available from the RD (up to 120 days) and the CG (up to 300 days), but beyond 300 days, only the NCLT can grant relief. Companies should maintain robust internal systems, engage qualified professionals, and conduct periodic charge audits to ensure full compliance.

Frequently Asked Questions (FAQs)

Q1. What happens if a company fails to register a charge with the ROC within 30 days?

If a company fails to register a charge within 30 days, it can still file Form CHG-1 with additional fees within 60 days. Beyond 60 days, condonation of delay from the Regional Director (up to 120 days) or the Central Government (up to 300 days) is required under Section 87. Beyond 300 days, the company must approach the NCLT. If the charge remains unregistered, it becomes void against the liquidator and creditors under Section 79, meaning the lender loses its secured status. Additionally, penalties under Section 86 apply — up to Rs. 10 lakh for the company and imprisonment or fine for officers in default.

Q2. Is CERSAI registration required in addition to ROC registration, and what are the consequences of non-filing?

Yes, CERSAI registration is a separate and concurrent obligation under the SARFAESI Act 2002. It applies to security interests over immovable property, hypothecation of movable assets, and securitisation transactions. Non-registration with CERSAI means the security interest is not enforceable against subsequent secured creditors who have registered with CERSAI. A penalty of up to Rs. 5,000 per day of delay (maximum Rs. 5 lakh) may also be levied. Companies must file with both the ROC (under the Companies Act) and CERSAI (under the SARFAESI Act) within their respective timelines.

Q3. What is the difference between Form CHG-1, CHG-4, and CHG-6?

CHG-1 is used for the initial registration of a charge (creation) with the ROC, covering all charges except debentures (which use CHG-9). CHG-4 is used for reporting the modification of an existing registered charge — such as a change in the amount secured, the property charged, or the charge holder. CHG-6 is used for reporting the satisfaction (full repayment) of a charge, so the encumbrance is removed from the company’s records. All three forms must be filed within 30 days of the respective event (creation, modification, or satisfaction).

Q4. Can the Central Government condone delay in charge registration beyond 300 days?

No, the Central Government’s power to condone delay under Section 87 of the Companies Act 2013 is limited to 300 days from the date of creation of the charge. Beyond 300 days, the only remedy available is to approach the National Company Law Tribunal (NCLT), which has the power to allow registration of charges in exceptional circumstances, subject to conditions that protect the rights of intervening creditors. The NCLT route involves a more rigorous process, including notice to all affected parties and a hearing.

Q5. Does a company need to maintain a separate register of charges, and who can inspect it?

Yes, under Section 82 of the Companies Act 2013, every company is required to maintain a Register of Charges at its registered office. This register must contain details of all charges — their nature, amount, the property charged, and the charge holder. Under Section 83, the register and copies of instruments creating the charges are open to inspection by any member of the company (free of charge) and by any other person (on payment of a prescribed fee). Failure to maintain this register attracts penalties under Section 86.

Virtual Auditor | CA V. Viswanathan | IBBI Registered Valuer (Reg. No. IBBI/RV/03/2019/12333)
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This article is for informational purposes only and does not constitute legal or professional advice. For specific guidance on charge registration and compliance, please consult a qualified Company Secretary or Chartered Accountant.

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