If you lend to a company, buy its assets, or advise on either, the register of charges kept by the Registrar of Companies (ROC) is one of the first places to look. It tells you who already claims security over the company's property, and on what terms.
This guide covers the legal framework in Chapter VI of the Companies Act, 2013 and the Companies (Registration of Charges) Rules, 2014, the forms involved, and how to read the index of charges.
What counts as a charge
Section 2(16) defines a charge as an interest or lien created on the property or assets of a company, or any of its undertakings, as security, and includes a mortgage. Hypothecation of stock and receivables, pledges of shares held by the company, and mortgages of land all fall within it.
Note what is outside it: a personal guarantee given by a promoter is not a charge on the company's property, and will not appear on the register.
The registration duty: s.77 and CHG-1
Under s.77(1), a company must register the particulars of a charge it creates, signed by the company and the charge holder, together with the instrument creating it, within 30 days of creation.
If the company misses 30 days, the Registrar may allow registration on application CHECK: confirm current proviso text:
- within 60 days of creation, on payment of additional fees; and
- if still not registered, within a further 60 days, on payment of ad valorem fees.
These periods apply to charges created on or after the 2018 Ordinance which amended s.77; older charges had a 300-day outer limit CHECK: commencement date, cited as 2 November 2018. Beyond these windows, the route is an application to the Central Government (in practice the Regional Director) under s.87 in Form CHG-8 for extension of time or rectification CHECK: delegation of s.87 powers to the Regional Director.
Under rule 3 of the Charges Rules, the form is:
- CHG-1 for charges other than those for debentures; and
- CHG-9 for charges for debentures, including rectification.
The same forms are used to register a modification of an existing charge (s.79), such as an increase in the amount secured or a change in the property charged.
On registration the Registrar issues a certificate of registration (CHG-2), or a certificate of modification (CHG-3) CHECK: certificate form numbers under the Rules as currently amended.
If the company does not register
Under s.78, the charge holder may apply for registration itself. The Registrar gives the company notice and, unless the company registers the charge or shows cause within 14 days, may register it. The charge holder can recover the fees it paid from the company CHECK: rule 3(3) as substituted in 2019.
Why registration matters
Section 77(3) is the key consequence. A charge that is not registered, and for which no certificate of registration has been issued, is not taken into account by a liquidator, by an insolvency resolution professional under the Insolvency and Bankruptcy Code, 2016, or by any other creditor. The underlying debt survives under s.77(4); the security does not bind them.
Section 80 adds that once a charge is registered, any person acquiring the property is deemed to have notice of it from the date of registration.
Satisfaction: s.82 and CHG-4
When a loan secured by a charge is repaid, s.82 requires the company to give intimation to the Registrar in Form CHG-4 within 30 days of payment or satisfaction in full. The Registrar may allow later intimation, up to 300 days, with additional fees CHECK: confirm proviso to s.82(1) and its current period.
On receipt, the Registrar issues a notice to the charge holder to show cause, within the period stated (not exceeding 14 days), why satisfaction should not be recorded. If no cause is shown, the Registrar records satisfaction and issues a certificate (CHG-5) CHECK: certificate form number and rule 8 of the Charges Rules. If the charge holder objects, the register is not altered and the Registrar informs the company.
Section 83 separately allows the Registrar to record satisfaction, in whole or part, on evidence that the debt has been paid or the property released, even where the company did not file CHG-4 within time.
The index of charges
The index of charges is visible with the company's master data on the MCA portal. For each charge it typically shows CHECK: column names as displayed on V3:
- charge ID;
- name of the charge holder;
- amount secured;
- date of creation, date of last modification and date of satisfaction;
- status, such as open or satisfied;
- sometimes the address of the charge holder or the property.
The charge documents themselves, including CHG-1, CHG-9, CHG-4 and the instruments attached to them, are available through View Public Documents under the charge documents category.
Reading open and satisfied charges
An open charge
An open charge means satisfaction is not on file. It does not prove the debt is still outstanding. Common reasons for a stale open charge:
- the loan was repaid but CHG-4 is not on file;
- the lender changed through assignment or merger and the record was not updated;
- the charge covers a working capital limit that is still sanctioned but undrawn.
Ask the company for no-dues or release letters from the lender, and compare with borrowings in the latest AOC-4.
A satisfied charge
A satisfied charge is historical but still useful. It shows past lenders and past security, which may explain current relationships. A pattern of refinancing at short intervals, or charges satisfied just before a sale, may deserve questions.
What to read in the instrument
The index gives you a headline amount. The real terms are in the attachments to CHG-1 or CHG-9: the deed of hypothecation, mortgage, or debenture trust deed. Check:
- the property charged, and whether it is fixed or floating;
- whether the charge is first, second, or pari passu with others;
- negative pledge or restrictions on further charges;
- the amount, which may be a sanctioned limit rather than the amount drawn;
- joint charges with group companies.
What the register will not show you
- Security registered only with CERSAI under the SARFAESI framework, or only with a sub-registrar under the Registration Act, 1908, where the company failed to register with the ROC.
- Personal guarantees by promoters and corporate guarantees given by the company.
- Charges on property of a third party given for the company's debts.
- Liens arising by operation of law.
- Charges that were created but where no filing is on record.
Also remember the company's own register of charges under s.85, kept at its registered office in Form CHG-7 and open to inspection by members and creditors. It should match the ROC record; differences are worth asking about.
A short procedure
- Read the index of charges, open and satisfied.
- Download the CHG-1 or CHG-9 and instruments for each open charge.
- Compare charge amounts with borrowings in the latest financial statements.
- Ask for evidence of repayment for any open charge the company says is discharged.
- Search CERSAI and the relevant sub-registrar where land or significant assets are involved.
NyayAssist MCA downloads the charge forms with their attached instruments and shows each charge in the company profile against the filing it came from.
Skip the portal. Give NyayAssist the CIN and read the cited profile.