Board Resolution for Charge Creation
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 Articles of Association of a company 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.
