In this article we will talk about Satisfaction of charge by the Company at the time of repayment of secured loan in full to banks or financial institution.
Section 82 of the Companies Act, 2013 states that A Company or Charge holder shall give intimation to the registrar in Form CHG-4 of the payment or satisfaction in full of any charge registered within a period of thirty days from the date of such payment or satisfaction.
The Registrar may, on an application by the Company or the charge holder, allow intimation of payment or satisfaction within a period of Three Hundred days of such payment or satisfaction on payment of additional fees as prescribed under the Act.
If the registration is not made within Three Hundred days of payment, then, the Company is required to apply for condonation of delay to the Central Government (powers delegated to the Regional Director) in E-form CHG-8 with prescribed fee and in hard copy. The order passed by the Central Government u/s 87 shall be required to be filed with the Registrar in e-Form No. INC-28 along with the fee as per the conditions stipulated in the said order.
Process of satisfaction of the Charge: –
- Convene a Board Meeting and authorise any of the Director of the Company to sign and file Form CHG-4 with the concerned Registrar.
- Fill the details and amount carefully from the supporting documents.
Attachments with Form CHG-4
- Letter of the charge holder stating that the amount has been satisfied i.e. No Objection Certificate.
- After preparing the Form affix DSC of the Director and get it signed by the Bank or Financial Institiution. Lastly, Certification of Practising professional is also required after signatures of the Bank.
- File the Form and pay the requisite fee. After successful filing, the Registrar will issue a Certificate of Registration of Satisfaction of Charge in Form CHG-5.
There may be times where a company may fail to send intimation of satisfaction of charge to the Registrar but according to section 83 of the Act, registrar may enter in the register of charges memorandum of satisfaction on receipt of evidence to his satisfaction that –
(a) The debt for which the charge was given has been paid or satisfied in whole or in part; or
(b) Part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking.
The Registrar shall inform affected parties within thirty days of making the entry in the registrar of charges and issue a certificate of registration of satisfaction of charge in Form No.CHG-5.
Penalty Provisions: –
- If any default is made in complying with the aforesaid provisions, the Company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees and every officer of the Company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
- If any person wilfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of section 77, he shall be liable for action under section 447.
Important Notes: –
- The No Objection Certificate from bank shall contain the amount of Loan and date of payment in full.
- Every Company shall keep at its registered office, a register of charges in Form CHG-7 which shall include therein all charges and floating charges affecting any property or assets of the company or any of its undertakings and date of satisfaction.
- The register of charges and instrument of charges 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 may be prescribed,
subject to such reasonable restrictions as the Company may, by its articles, impose.
- The register of charges shall be preserved permanently and the instrument creating a charge or modification thereon shall be preserved for a period of eight years from the date of satisfaction of charge by the company.
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