A Power Point Presentation of Chapter 6 of Companies Act, 2013

1. Companies Act, 2013-Chapter VI
By CS Mamta Binani
Past Chairperson (Year 2010), EIRC of ICSI
Practising Company Secretary
Presentation for Chartered Accountants
B.B. D Bagh Study Circle-EIRC of ICAI at Kolkata
mamtab@mamtabinani.com
dated : 24.11.2013
Room No.6, 4th Floor, Commerce House
2A, Ganesh Chandra Avenue, Kolkata 700013
Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551
mamtab@mamtabinani.com
Visit me @ : www.mamtabinani.com

2. Chapter VI
• The heading of the Chapter is:
• ‘Registration
of Charges’ under the Companies Act,
2013
•
It consists of sections 77 to 87 (11 sections)
• Section
86 (Punishment for contravention) has
become effective from 12.09.2013

3. Section 77 (old sections 125,132)
• Duty to register charges etc.
• A company creating a charge,
shall, register the
particulars of the said charge with the ROC within 30
days of its creation.
• This charge could be:
a. on its property or assets or
b. any of its undertakings
c. whether tangible or otherwise
• Situated in or outside India
• Signed by both the Company and the charge-holder
• Together with the instruments creating the charge

4. • In
Section
st
77(1)-1
Proviso
the previous slide, we mentioned 30 days
(section 77(1))
• ROC may on application by the company, allow
this registration within 300 days (30+270), on
payment of additional fees
• This application shall be supported by a
declaration from the company by its secretary or
director that such belated delay shall not adversely
affect rights of any other creditors of the company
• If not within 300 days, company to seek extension
of time from the CG; applicable section 87 (akin
section 141)-Form no. 6.8 .

5. Forms for registration of charge
• Form no. 6.1- both for creation or modification

6. Attachments with Form 6.1
• Rule 5 (rules are still in draft mode)
1. where the instrument or deed relates solely to the
property situate outside India, the copy (instrument
evidencing the creation/mod) shall be verified by:
a. a certificate issued either under the seal of the
company or
b. under the hand of any director or company
secretary of the company or
c. an authorised officer of the charge holder or
d.under the hand of some person other than the
company who is interested in the mortgage or charge,
stating that it is a true copy;

7. Attachments with Form 6.1
• Rule 5 (rules are still in draft mode)
2. where the instrument or deed relates, whether
wholly or partly, to the property situate in India,
the copy shall be verified by:
a. a certificate issued under the hand of any
director or company secretary of the company or
b. an authorised officer of the charge holder
stating that it is a true copy.

8. Charges requiring registration
• (a) a charge created for the purpose of securing
any issue of debentures or deposits;
• (b) a charge on uncalled share capital of the
company;
• (c) a charge on any immovable property,
wherever situate, or any interest therein;
• (d) a charge on any book debt of the company;
• (e) a charge, not being a pledge, on any movable
property of the company;

9. Charges requiring registration….
• (f) a floating charge on the undertaking or any
property of the company including stock-intrade;
• (g) a charge on calls made but not paid;
• (h) a charge on a ship or any share in a ship;
• (i) a charge on intangible assets, including
goodwill, patent, a licence under a patent, trade
mark, copyright or a licence under a copyright.
(comments: the list above is same as was in
section 125(4). The underlined words have been
added)

10. Registration certificate by Registrar
• Creation of charge: ROC shall issue a certificate of
registration of such charge in Form no. 6.2
• Modification of charge: ROC shall issue a
certificate of modification of charge in Form no.
6.3
• The certificate issued by the Registrar shall be
conclusive evidence that the requirements of
Chapter VI of the Act and the rules have been
complied with.

11. Section 77 (3)
• The
liquidator or any other creditor
shall not take into account any charge
created unless registered with the
Registrar.

12. Vehicle hypothecation requires charge?
 No charge by way of hypothecation of a
motor vehicle shall require registration
 Unless the financier, so requires
 If not registered, the disclosures shall be
given in the Balance Sheet regarding all such
charges created by way of hypothecation of
motor vehicles and the fact that charge has
not been registered and the financiers have
not required so

13. Section 78 (old section 134)
• Application for registration of charge
• In case the company fails to get the charge
registered, then the charge-holder may apply
to ROC for the registration of the same
• On receiving such application, the ROC shall
send notice to company
• And within 14 days, unless the company
doesn’t show sufficient cause as to why the
said charge should not be registered, shall
register the charge without signature of
company

14. Section 78….contd
• If the company fails to register a charge within the
period of 30 days of its creation, the particulars of
the charge together with a copy of the instrument,
if any, creating or modifying the charge may be
filed by the charge-holder, in Form no. 6.1
• The form can be just duly signed by the chargeholder and submitted along with additional fees
• The
said charge-holder shall be entitled to
recovery of fees and additional fees paid to ROC
from the company

15. Section 79 (old sections 127,135)
• The provisions of registration of charges
shall equally apply to:
(a) a company acquiring any property
subject to a charge; or
(b) any modification in the terms or
conditions or the extent or operation of any
registered charge

16. Section 80 (old section 126)
• It
provides that if any person acquires a
property, asset or undertaking for which a
charge is already registered
• Then it would be deemed that he has complete
knowledge of that charge from the date the said
charge is registered with the ROC

17. Section 81 (old section 130)
• The
Registrar shall, in respect of every company,
keep a register containing particular of charges so
registered
• The register shall be open for inspection by any
person on payment of fee as specified in ‘Annexure
B’
• Rule 6.5 (draft): The particulars of charges
maintained on the MCA portal shall be deemed to
be the register of charges for the purposes of section
81.

18. Section 82 (old sec 138, 140)
• A company shall give intimation to the ROC in Form
•
•
no. 6.4 of the satisfaction in full of any registered
charge within a period of 30 days from the date of such
satisfaction
In case of delay upto 300 days beyond 30 days
(30+270), the same procedure of application to ROC is
to be followed like in case of creation of charge
If the form is filed without the signature of chargeholder, ROC shall send notice to the charge-holder
calling upon him to show cause within such time not
exceeding 14 days, as to why the satisfaction should not
be recorded. If no cause shown, ROC will register

19. Section 83 (old section 139)
• Power of
ROC to make entries of satisfaction in
absence of intimation from company
• Sometime, it may be possible that company fails to
send intimation of satisfaction of charge to the
Registrar but registrar receive evidence of
satisfaction from any other person. This person
may be charge – holder, Shareholder, Purchaser or
any one.
• Of course, the section mentions about evidences
that will have to be produced.

20. Section 83 (old section 139)
• Evidence
•
•
•
•
•
needs to be produced to the ROC of
satisfaction with respect to any registered charge:
a. That the debt for which the charge was given
has been satisfied in whole or in part; or
b. That part of the property or undertaking
charged has been released from the charge; or
c. That part of the property or undertaking
charged has ceased to form part of the company’s
property or undertaking
The ROC, on being satisfied, may enter in the register
of charges that the charges are satisfied
And shall inform the affected parties within 30 days of
making the entry in the register of charges

21. Memorandum of Satisfaction
• Where the ROC enters a memorandum of
satisfaction of charge in full in pursuance of
section 82 or in pursuance to section 83, he
shall issue a certificate of registration of
satisfaction of charge in Form no. 6.5.

22. Section 84 (old section 137)
• Intimation of appointment of Receiver or Manager
• SITUATION 1 – 84(1)
• If any person obtains an order:
• a. for the appointment of a receiver; or
• b. of a person to manage;
the property, which is already subject to a charge of
a company; or
• SITUATION 2 – 84(1)
• If any person appoints such receiver/ manager
under any power contained in any instrument

23. Section 84 (old section 137)
• That
person shall, within 30 days of the
order/appointment,
give notice of
such
appointment:
• a. to the company; and
• b. to the ROC along with copy of the order/
instrument
• ROC to register particulars of receiver/ manager/
person/ instrument in the register of charges
• 84(2): The person so appointed shall give notice,
on cessation of his appointment, to the company
and the ROC and the ROC to register the same

24. Intimation to ROC- Form no.6.6
• Notice of appointment;
• Or cessation of appointment of a receiver or of a
manager; for
• The property, subject to charge, of a company• Shall be filed with the Registrar in Form no. 6.6
along with fee as specified in Annexure ‘B’

25. Section 85 (old section 143,144)
• Company’s Register of Charges
• 85(1): Every company shall keep at its registered office
•
•
a register of charges which shall include therein all
charges and floating charges affecting any property or
assets of the company or any of its undertakings
The instrument creating the charge shall also have to
be kept along with the register
Rule 6.8 (draft): The register of charges shall be in
Form no. 6.7 and enter therein particulars of all the
charges registered with the Registrar as well as
particulars of any modification of charge and that of
satisfaction of charge

26. Register of charges
• As per Rules (draft)
• The entries in the said register shall be made forthwith
after the creation, modification or satisfaction of
charge, as the case may be.
• Entries in the register shall be authenticated by the
secretary of the company or any other person
authorised by the Board for the purpose.
• The register shall be preserved permanently and the
instrument creating a charge shall be preserved for a
period of 8 years from the date of satisfaction of charge
by the company.

27. Inspection of the register of charges
• 85(2):
•
•
The register of charges and instrument of
charges, kept under sub-section (1) shall be open for
inspection during business hours:
(a) by any member or creditor without any payment of
fees; or
(b) by any other person on payment of such fees as
prescribed in Annexure B and subject to such
reasonable restrictions as the company may, by its
articles, impose.

28. Section 86 (old section 142)
• Punishment for Contravention
• If any company contravenes
any provision of this
Chapter (i.e. Chapter VI);
• The company shall be punishable with fine which shall
not be less than Rs.1.00 lakh but which may extend to
Rs.10.00 lakhs;
• And every officer of the company who is in default
shall be punishable with imprisonment for a term
which may extend to 6 months or with fine which shall
not be less than Rs.25,000 but which may extend to
Rs.1.00 lakh, or with both
(Comments: Penal provisions increased manifold)

29. Section 87 (old section 141)
• Rectification by Central Government (CG) in register
of charges
• CG on being satisfied that an omission that has
occurred:
a. was accidental or
b. due to inadvertence or
c. some other sufficient cause or
d. it is not of a nature to prejudice the position of
creditors or shareholders of the company or
e. on any other grounds, it is just and equitable to grant
relief

30. Condonation of delay by CG
• CG may on an application:
•
•
•
a. of the company; or
b. any person interested
direct that the time for filing be extended or as the
case may require, that the omission/ mis-statement be
rectified
Rule 6.10(1): Where the instrument creating,
modifying or satisfying a charge is not filed within 300
days, the ROC shall not register the same unless the
delay is condoned by the Central Government
The application for condonation of delay shall be filed
with the CG in Form no. 6.8 along with the fee as
specified in Annexure ‘C’

31. of the Companies Act, 2013
Room No.6, 4th Floor, Commerce House
2A, Ganesh Chandra Avenue, Kolkata 700013
Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551
mamtab@mamtabinani.com
Visit me @ : www.mamtabinani.com