Documents Required For Charge Creation Registration in India

When a company borrows money from a bank, financial institution, or lender and provides its assets as security, it must register the charge with the Registrar of Companies (ROC). Charge creation is governed by the Companies Act, 2013, and is typically filed using Form CHG-1. To ensure timely registration and compliance, companies must submit the required documents and information.

What is Charge Creation?

A charge is a legal right created by a company in favor of a lender against its assets or properties as security for a loan or financial obligation. Registering the charge with the ROC ensures transparency and protects the interests of creditors and stakeholders.

Why is Charge Registration Important?

Registering a charge helps:

Establish the lender's legal claim over the secured assets.
Ensure compliance with the Companies Act, 2013.
Protect the rights of creditors in case of default.
Maintain accurate public records of company borrowings.
Avoid penalties for delayed filing.

Documents Required For Charge Creation Registration

1. Loan Agreement or Sanction Letter

The company must provide a copy of the loan agreement, sanction letter, or facility agreement issued by the lender specifying:

Loan amount
Terms and conditions
Repayment schedule
Security details

2. Instrument Creating the Charge

A copy of the instrument creating or evidencing the charge must be submitted. This may include:

Deed of Hypothecation
Mortgage Deed
Security Agreement
Debenture Trust Deed

3. Board Resolution

A certified copy of the board resolution authorizing:

Borrowing of funds
Creation of charge on company assets
Authorized signatory for filing

4. Certificate of Incorporation

A copy of the company's Certificate of Incorporation issued by the Registrar of Companies.

5. PAN of the Company

Permanent Account Number (PAN) of the company for identification and verification purposes.

6. Details of the Charge Holder

Information relating to the lender or charge holder, including:

Name of lender
Address
Email ID
CIN or registration number, where applicable

7. Details of Secured Assets

The company must provide details of assets on which the charge is being created, such as:

Land and building
Plant and machinery
Inventory
Book debts
Movable assets

8. Authorized Signatory Details

Details of the director, company secretary, or authorized representative responsible for filing the charge registration.

9. Digital Signature Certificate (DSC)

A valid DSC of the authorized signatory is required for electronic filing with the Ministry of Corporate Affairs (MCA).

10. Professional Certification

The charge filing may require certification by a practicing:

Chartered Accountant (CA)
Company Secretary (CS)
Cost Accountant (CMA)

Additional Documents in Specific Cases

Depending on the nature of the transaction, additional documents may be required:

For Mortgage Charges

Property ownership documents
Valuation reports
Encumbrance certificates

For Debenture Issues

Debenture trust deed
Debenture subscription agreement

For Consortium Financing

Joint lending agreements
Inter-creditor arrangements

Information Required for Form CHG-1 Filing

While filing Form CHG-1, companies must provide:

Date of charge creation
Amount secured by the charge
Terms of repayment
Rate of interest
Description of secured assets
Details of charge holder

Common Reasons for Rejection of Charge Registration

Applications may be rejected due to:

Incomplete loan documentation
Incorrect charge holder details
Missing board resolutions
Mismatch in asset descriptions
Delayed filing beyond prescribed timelines

Conclusion

Charge creation registration is a critical compliance requirement for companies obtaining secured financing. Maintaining proper documentation helps ensure smooth filing of Form CHG-1 and timely registration of the charge with the Registrar of Companies. Companies should verify all supporting documents before submission to avoid delays and regulatory complications.

Back to Learn