Relaxation of Time to File Forms for Creation or Modification of Charge

Provisions of Section 77 of the Companies Act, 2013 mandate that a company must file forms related to the creation or modification of charge, specifically Form No. CHG-1 and Form No. CHG-9, within a maximum of 120 days from the date of charge creation or modification. Due to the impact of COVID-19, the Ministry of Corporate Affairs (MCA), through circular no. 23/2020 dated 17th June 2020, has introduced the ‘Scheme for Relaxation of Time for Filing Forms Related to the Creation of Charge or Modification of Charge’. This initiative aims to condone delays in the filing process as part of a relief measure.

The scheme has been in effect since 17th June 2020. Below, we provide a comprehensive explanation of the newly introduced scheme.

Applicability of the Scheme

The scheme applies to the filing of Form No. CHG-1 and Form No. CHG-9 under any of the following situations:

The date of creation or modification of charge is before 1st March 2020, and the time limit for filing these forms had not expired as of 1st March 2020.
The date of creation or modification of charge falls between 1st March 2020 and 30th September 2020.

Facility of Relaxation of Time and Applicable Fees

Below is an outline of the relaxation in timelines available for eligible cases under the scheme:

Particular	Relaxation of Time
Charge created before 1st March 2020, with the 120-day period not expired.	The time period between 1st March 2020 and 30th September 2020 shall not be counted towards the number of days of default under section 77 or section 78.
Charge created between 1st March 2020 and 30th September 2020	The period from the date of creation of charge until 30th September 2020 shall not be counted for calculating default days under section 77 or section 78.

For both scenarios, if the applicable form is not filed by 30th September 2020, the count of default days under section 77 or section 78 of the Companies Act, 2013 will start from 1st October 2020.

The applicable fees are as follows:

Particulars	Situation	Applicable Fees
Charge created before 1st March 2020, with the period of 120 days not expired.	If Form No. CHG-1 or Form No. CHG-9 is filed before 30th September 2020	Fees payable as on 29th February 2020 under the Fees Rules.
If Form No. CHG-1 or Form No. CHG-9 is filed after 30th September 2020	Fees as on 29th February 2020 plus fees for days from 1st October 2020 until filing.
Charge created between 1st March 2020 and 30th September 2020	If Form No. CHG-1 or Form No. CHG-9 is filed before 30th September 2020	Normal fees as per the Fees Rules.
If Form No. CHG-1 or Form No. CHG-9 is filed after 30th September 2020	Fees for delay days from 1st October 2020 to filing date.

Excluded Cases under the Scheme

The scheme excludes the following cases:

Form No. CHG-1 or Form No. CHG-9 filed before the scheme's introduction.
Form No. CHG-1 or Form No. CHG-9, where the timeline expired by 1st March 2020.
Form No. CHG-1 or Form No. CHG-9 filed after 30th September 2020.
Filing of Form No. CHG-4 for satisfaction of charges.

Overall, this scheme provides critical relief to companies dealing with the financial and procedural challenges brought about by the COVID-19 pandemic. For further understanding, you can explore topics like commercial paper in India and other compliance matters that are essential for businesses today.

For assistance or more information about charge creation or modification and relevant company processes, consult our expert services.

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Frequently Asked Questions

Common questions about Relaxation to File Forms for Charge Creation or Modification.

The scheme aims to provide relief and condone the delay in filing Form No. CHG-1 and Form No. CHG-9, which relate to the creation or modification of charge, respectively. This is a measure introduced by the Ministry of Corporate Affairs (MCA) in response to the COVID-19 situation.

The scheme is applicable in either of the following two situations: (1) The date of creation/modification of charge is before 1st March 2020, and the time limit for filing Form No. CHG-1 or Form No. CHG-9 had not expired as on 1st March 2020; or (2) The date of creation/modification of charge falls on any date between 1st March 2020 to 30th September 2020.

If the charge was created before 1st March 2020 and the 120-day period had not expired, the time period between 1st March 2020 to 30th September 2020 will not be counted for calculating the number of days of default. For charges created between 1st March 2020 to 30th September 2020, the period from the date of creation till 30th September 2020 will not be counted.

If the forms are filed after 30th September 2020 for charges created before 1st March 2020, the fees payable will be the fees as on 29th February 2020 under the Fees rules, plus additional fees charged after adding the number of days from 1st October 2020 until the date of filing.

No, the scheme is not applicable to Form No. CHG-1 or Form No. CHG-9 that have already been filed before the introduction of the scheme on 17th June 2020.

No, the scheme is not applicable to the filing of Form No. CHG-4, which is related to the satisfaction of charges. The scheme is only applicable to Form No. CHG-1 and Form No. CHG-9.

The scheme is applicable for Form No. CHG-1 and Form No. CHG-9 to be filed on or before 30th September 2020. Forms filed after this date will not be eligible for the relaxation of time and applicable fees under the scheme.

If a charge was created on 1st April 2020, the period from 1st April 2020 till 30th September 2020 will not be counted for calculating the number of days of default. The effective date for calculating the number of days of default will be 1st October 2020.

No, the scheme is not applicable to charges created after 30th September 2020. The scheme only covers charges created before 1st March 2020 or between 1st March 2020 to 30th September 2020.

The relaxation of time and applicable fees under the scheme is a relief measure introduced by the Ministry of Corporate Affairs (MCA) to condone the delay in filing Form No. CHG-1 and Form No. CHG-9 due to the COVID-19 situation. It aims to provide companies with additional time and reduced fees for filing these forms related to the creation or modification of charges.