Board Resolution for Charge Creation

Charge creation is done when a company borrows money against property owned by the company. For instance, if a company mortgages property owned by the company for raising a mortgage loan in the name of the company, then a charge would be created over the property mortgaged by filing a document with the

MCA. Normally, charge creation can be authorised by a resolution of the Board. However, if the 1 provide for a resolution of the general meeting, the same must be passed. Once the board resolution is passed, the return in e-Form No. CHG-1 should be filed online with the MCA together with the instrument for creating the charge, within thirty days from the date of creation of the charge.

Condonation of Delay in Charge Filing

In case a charge creation filing is not done within 30 days from the date of creation of the charge, ROC is authorised to accept the charge filing within an additional 270 days thereafter on payment of additional fees. However, if a charge is not filed even after 300 days, then the company will have to seek an extension of time by filing an application to the Central Government in e-Form No.CHG-8 and the order passed by the Central Government can be filed by the Company with the Registrar in e-Form INC-28.

Board Resolution Format for Charge Creation

The following board resolution format can be used for charge creation: RESOLVED that consent fo the Company be and is hereby given to the Board of Directors to secure the amount of Rs. <Loan amount> with interest at <Interest Rate> per annum obtained by the company from the <Borrower Name and Address> by creating a charge on the company's immovable property, plant and machinery, cars, vehicles, furnitures and fittings and floating charge on the whole of the undertaking and the assets of the company in favour of the <Borrower Name>.

Note: In case a property is pledged, the details of the specific property must be mentioned in the board resolution.

Back to Learn

Frequently Asked Questions

Common questions about Charge Creation Board Resolution for Companies.

Charge creation is the process of creating a legal charge or security interest over a company's assets, such as property, machinery, or other valuable assets, to secure a loan or borrowing from a lender. This process involves filing a document (e-Form CHG-1) with the Ministry of Corporate Affairs (MCA) within 30 days of creating the charge.

A Board Resolution for Charge Creation is typically required when a company needs to borrow money against its assets, such as property or machinery. The resolution authorizes the company's Board of Directors to create a charge or security interest over these assets in favor of the lender.

The process for filing a charge creation involves passing a Board Resolution authorizing the charge creation, and then filing e-Form CHG-1 with the MCA within 30 days of creating the charge. The company must also submit the instrument for creating the charge, such as a mortgage deed or loan agreement.

If a charge creation is not filed within 30 days from the date of creation, the Registrar of Companies (ROC) can accept the filing within an additional 270 days upon payment of additional fees. If the charge is not filed even after 300 days, the company must seek an extension of time by filing e-Form CHG-8 with the Central Government.

A Board Resolution for Charge Creation should typically include details such as the loan amount, interest rate, the name and address of the lender, the specific assets being charged (e.g., property, machinery), and authorization for the Board of Directors to create the charge in favor of the lender.

Yes, if the company's Articles of Association require a resolution of the general meeting for charge creation, then a resolution must be passed by the shareholders in a general meeting instead of a Board Resolution.

The ROC is authorized to accept a charge creation filing within 30 days from the date of creation of the charge. If the filing is delayed, the ROC can accept it within an additional 270 days upon payment of additional fees.

e-Form CHG-8 is used by a company to seek an extension of time from the Central Government for filing a charge creation, if the charge has not been filed even after 300 days from the date of its creation.

e-Form INC-28 is used by a company to file the order passed by the Central Government regarding an extension of time for filing a charge creation, with the Registrar of Companies.

If a company fails to file a charge creation with the MCA, it can face penalties and legal consequences. The charge may also become void against the liquidator or creditors in case of insolvency proceedings.