Cicc - Pi - 1.2 - M02L05-2 - 2017 - en - V02 PDF
Cicc - Pi - 1.2 - M02L05-2 - 2017 - en - V02 PDF
Cicc - Pi - 1.2 - M02L05-2 - 2017 - en - V02 PDF
• Charges Registry and Registry Searches (Section 81, the Companies Act, 2013)
Section 81 of the ICA, 2013, requires the Registrar of Companies to maintain a register of all charges
registered in respect of every company. This is done at the state level in the ROC within which the
registered office of the company is located.
Charges registers are open for inspection by any person with a vested interest, with the payment of a fee.
Important: Prior to entering into the credit agreement and as part of your legal due diligence to protect
against fraud, you should conduct a register search to ascertain that no prior charge has been created
in favour of another creditor on the same asset that has been pledged to your bank. If assets are being
• Failure to Register Charges in a Timely Manner (Section 87, the Companies Act, 2013)
This section deals with how to handle the situation wherein the charge is not registered with the ROC
within the maximum period.
If the security charge is not registered within the required period of 30 days, but within 300 days, the
company needs to prepare an application for condonation of delay using form CHG-10. The application
must be supported by a declaration by the secretary or director of the company that the delay shall not
affect the rights of creditors. After due compliance, the Registrar shall issue the certificate of registration.
If the form to register the security charge is submitted after 300 days, an application for condonation
using form CHG-8 needs to be submitted with the Regional Director having territorial jurisdiction over the
company’s registered office, along with the requisite penalty. After payment of the same, the company
needs to:
1. Submit a challans with a covering letter containing a request to order allowing the condonation of
the delay.
2. Submit the order with the ROC within the stipulated time given in the order.
After approval of the order, and due compliance, the Registrar shall issue a certificate of registration.
Important: Perfecting your loan security requires that the borrower registers the charge with the
appropriate office. The credit facility agreement will contain an appropriate covenant requiring the
borrower to do so. Failure of the borrower to do so may significantly impact the risk of the bank’s credit
exposure and constitutes a breach of contract. Any delay in executing the necessary documents within the
required time can lead to a loan recall notice.