Relaxation of time to file forms for creation or modification of charge

Relaxation of time to file forms for creation or modification of charge

Provisions of section 77 of the Companies Act, 2013 mandates the company to file form relating to the creation or modification of charge (i.e., Form No. CHG-1 and Form No. CHG-9) within maximum 120 days from the date of creation of charge or modification of charge, as the case may be. On account of COVID-19, as part of relief measure and with a view to condone the delay in filing forms relating to creation or modification of charge. The Ministry of Corporate Affairs (MCA), vide circular no. 23/2020 dated 17th June 2020, has introduced ‘Scheme for relaxation of time for filing forms related to the creation of charge or modification of charge’.

The scheme is valid from 17th June 2020. The present article exhaustively explains the newly introduced scheme.

Applicability of the Scheme

The Scheme shall be applicable for filing of Form No. CHG-1 and Form No. CHG-9 under any 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 has 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.

The facility of relaxation of time and applicable fees thereon

Following relaxation of time is available to cases eligible under the scheme-

ParticularRelaxation of time
The charge is created before 1st March 2020 and the period of 120 days has not expired.The time period between 1st March 2020 to 30th September 2020 shall not be calculated for the purpose of counting the number of days of default under section 77 or section 78.
The charge is created between the period 1st March 2020 to 30th September 2020The period starting from the date of creation of charge till 30th September 2020 shall not be calculated for the purpose of counting the number of days of default under section 77 or section 78.

In both the above cases, if the applicable form is not filed till 30th September 2020, then the first day after 29th February 2020 shall be 1st October 2020 for the purpose of counting the number of days of default under section 77 or section 78 of the Companies Act, 2013.

The applicable fees are as follows-

ParticularsSituationApplicable fees
The charge is created before 1st March 2020 and the period of 120 days has not expired.If Form No. CHG-1 or Form No. CHG-9 is filed on or before 30th September 2020Fees 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 2020Fees payable as on 29th February 2020 under the Fees rules. Additionally, fees charged after adding a number of days from 1st October 2020 untill the date of filing is also payable.
The charge is created between the period 1st March 2020 to 30th September 2020If Form No. CHG-1 or Form No. CHG-9 is filed on or before 30th September 2020Normal fees payable under the Fees Rules.
If Form No. CHG-1 or Form No. CHG-9 is filed after 30th September 2020Fees payable for number of days of delay from 1st October 2020 till the date of filing.

Cases excluded under the Scheme

The scheme shall not be applicable under the following cases-

  1. Form No. CHG-1 or Form No. CHG-9 which are already filed before the introduction of the scheme.
  2. Form No. CHG-1 or Form No. CHG-9 for which the time line has already expired on 1st March 2020.
  3. Form No. CHG-1 or Form No. CHG-9 to be filed after 30th September 2020.
  4. Filing of Form No. CHG-4 for satisfaction of charges.

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CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.