When a company takes a loan or borrows funds — and provides assets as security — the lender creates a legal "charge" over those assets. This charge must be registered with the Ministry of Corporate Affairs (MCA) within prescribed timelines. Failure to register a charge makes it void against liquidators and creditors — potentially catastrophic for a lender and damaging for the company's credibility. This guide explains charge registration, modification, and satisfaction.
💡 Taking a loan secured by assets? Charge registration with MCA within 30 days is mandatory. Our CA team files CHG-1 for companies across India — on time, every time. Send an Enquiry →
1. What is a Charge?
A charge is an interest or lien created on the assets of a company as security for money borrowed. When a bank, NBFC, or other lender extends a secured loan to a company and takes security over the company's property (land, building, machinery, receivables, stocks, or any other assets), a charge is created. The Companies Act requires every company to register such charges with the Registrar of Companies (RoC) so that the public — including future creditors and investors — can know about existing encumbrances on the company's assets.
2. Types of Charges
- Fixed Charge: Created on specific, identified assets — e.g., land and building, specific machinery. The company cannot dispose of these assets without the lender's consent.
- Floating Charge: Created on a class of assets that changes from time to time — e.g., inventory (stock), trade receivables, cash. The company can use these assets in normal business until the charge "crystallises" on default.
- Pari Passu Charge: Equal charge shared by multiple lenders — each has equal claim on the asset on default.
- Subservient / Second Charge: Second charge on assets already under a first charge — paid only after the first charge holder is satisfied.
3. Charge Registration — Form CHG-1
- Who files: The company (as chargor) must file — though the lender (chargee) can also file
- Form: CHG-1 (for charges other than debentures); CHG-9 (for debentures)
- Timeline: Within 30 days of creation of charge (extendable up to 60 days with additional fee)
- Documents required: Loan agreement / sanction letter, charge creation document (hypothecation agreement, mortgage deed), board resolution authorising the charge
- Fee: MCA fee depends on the amount of charge secured
- Certificate of Registration (CHG-2): Issued by RoC on successful registration
Missed the 30-day window? Condonation of delay is possible — but requires a court order or RD application. Act immediately to minimise complications.
Missed Deadline — Get Help →4. Charge Modification — CHG-1 (Modification)
When the terms of a charge are modified — interest rate change, additional assets included, revised loan amount, or change in lender details — the modification must be registered with the RoC within 30 days using CHG-1 (selecting "Modification" option). Key modification events include: additional facility on the same security, enhancement of credit limits, takeover by another bank, and consortium arrangements.
5. Charge Satisfaction — CHG-4
When a loan is fully repaid and the charge is released by the lender, the company must intimate the RoC about satisfaction (discharge) of the charge by filing Form CHG-4 within 30 days of satisfaction. The lender must verify the satisfaction (they receive a notice and have 15 days to respond). On approval, the charge record in MCA is marked as satisfied — removing the encumbrance from the company's public record.
| Action | Form | Timeline | Consequence of Default |
|---|---|---|---|
| Creation of charge | CHG-1 | 30 days (extendable to 60) | Charge void against liquidator/creditors |
| Modification of charge | CHG-1 (modification) | 30 days | Modification not effective against third parties |
| Satisfaction of charge | CHG-4 | 30 days | Charge still shown as active in MCA records |
Charge Registration, Modification & Satisfaction — CHG-1 / CHG-4 Filing
Our CA team files charge-related MCA forms for companies across India — including condonation of delay applications. Protect your company's compliance record and lender relationship with timely charge filings.
File Charge Form Now →Disclaimer: This article is for general informational and educational purposes only, representing our professional views as Chartered Accountants. It does not constitute legal or tax advice. Laws and regulations are subject to change. Please consult our team for situation-specific guidance.