A charge is a security interest created over a company's assets to secure a loan or other debt — in effect, a corporate mortgage. Under Section 77 of the Companies Act 2013, every company that creates a charge on its property, assets or undertaking, whether situated in or outside India, must register the particulars with the Registrar of Companies (ROC). The duty to register rests with the company, but if it fails to do so, the lender may register the charge under Section 78 and recover the cost from the company.
Types of charges
- Fixed charge: attaches to a specific, identifiable asset such as land, a building or plant and machinery.
- Floating charge: hovers over circulating assets such as stock-in-trade and receivables until it crystallises.
- Mortgage: a charge over immovable property, typically requiring a registered instrument.
- Hypothecation: a charge on movable goods where possession stays with the borrower (common for vehicle and inventory loans).
- Pledge: goods are delivered to the lender as security.
- Lien: a right to retain possession of goods until dues are cleared.
Registering a charge with the ROC
File Form CHG-1 (or Form CHG-9 for debentures) within 30 days of creating the charge, signed by both the company and the charge-holder, with the instrument creating the charge attached and the prescribed fee paid. On registration, the Registrar issues a certificate in Form CHG-2 and allots a unique charge ID — this identifies the charge and should not be confused with the company's CIN. Any later modification is filed in CHG-1 and certified in Form CHG-3.
If you miss the 30-day deadline
For charges created on or after 2 November 2018, the law allows staged delays on higher fees:
| Period from creation | What is possible | Fee payable |
|---|---|---|
| Within 30 days | Normal registration | Standard filing fee |
| Up to 60 days | Registrar may allow registration | Additional fees |
| A further 60 days (up to ~120 days) | Registrar may allow registration | Ad valorem fees |
| Beyond that | Only via Central Government condonation (Form CHG-8, Section 87) | As directed |
Satisfaction of charge
Once the loan is repaid, intimate the ROC by filing Form CHG-4 within 30 days of satisfaction so the charge is released. The Registrar may condone a delay of up to 300 days on payment of additional fees. Leaving this unfiled keeps a repaid charge showing as open on the company's record, which stalls future borrowing and buyer due diligence.
Penalties and why it matters
An unregistered charge is void against the liquidator and other creditors under Section 77(3) — the lender loses its secured status in insolvency, though the underlying debt is still recoverable. Under Section 86, default attracts a penalty of ₹5,00,000 on the company and ₹50,000 on every officer in default. Every company must also keep its own register of charges in Form CHG-7 at its registered office, and all registered charges are open to public inspection on the MCA portal, where lenders, investors and acquirers routinely check them.