Regulatory Alert: Relaxation: Registration / modification of charge
17 June 2020
Considering the current situation and disruption caused due to the COVID-19 pandemic, the Ministry of Corporate Affairs (MCA) on 17 June 2020 notified a scheme (the Scheme) which provides relaxation in the time limit for filing forms related to creation or modification of charges under the Companies Act, 2O13 (‘Cos Act’).
The key highlights of the Scheme are summarised below
- The Scheme is effective from 17 June 2020.
- The Scheme covers two e-Forms
- e-Form CHG-1- Application for registration of creation or modification of charge (other than those related to debentures)
- e-Form CHG-9 - Application for registration of creation or modification of charge for debentures or rectification of particulars filed in respect of creation or modification of charge for debentures
- As per section 77 of the Cos Act e-Form CHG-1 and e-Form CHG-9 can be filed within a period of 120 days from the date of creation or modification of the charge (within 30 days with normal fee, post application with Registrar of Companies - beyond 30 days but upto 60 days with additional fees and beyond 60 days with additional fees and ad valorem fees)
- The applicability of the Scheme has been summarised below:
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Particulars
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Where the date of creation / modification is before 01 March 2020 but the timeline for filing of the forms has not expired as on 01 March 2020
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Where the date of creation / modification falls on any date between 01 March 2020 to 30 September 2020 (both days inclusive)
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Relaxation of time for filing forms
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- The period between 01 March 2020 to 30 September 2020 (relaxation period - Case 1) shall not be counted for calculating the number of days within which forms were required to be filed
- If the Company does not file the forms within the relaxation period - Case 1, the number of days within which the forms were required to be filed shall be calculated resuming from 01 October 2020 (not taking into consideration the number of days under the relaxation period - Case 1)
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- The period from creation / modification of charge to 30 September 2020 (relaxation period - Case 2) shall be not be counted for calculating the number of days within which forms were required to be filed
- If the Company does not file the forms within the relaxation period - Case 2, day 1 for counting the number of days within which the forms are required to be filed will start from 01 October 2020
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Fees for filing of forms
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- If forms are filed before 30 September 2020, the fees calculation shall be done considering 29 February 2020 as filing date
- If the forms are filed after 30 September 2020 the fee calculation shall be done considering following number of days:
- From creation/modification to 29 February 2020; plus
- From 01 October 2020 to the date of filing of the forms
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- If forms are filed before 30 September 2020, normal fees as per number of days would be charged
- If the forms are filed after 30 September 2020, then the 1st day for purpose of calculation of number of days within which the form is required to be filed will start from 01 October 2020
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- The Scheme is not applicable to:
- Forms already filed before 17 June 2020
- Time limit of filing of the forms has already expired before 01 March 2020
- Filing of e-Form CHG-4 (satisfaction of charges)
BDO Comments
The relaxation of timeline is a welcome move by Ministry of Corporate Affairs and will offer respite to Companies from filing requirements considering the COVID-19 situation and is line with the intent of the MCA to ease the compliance burden on companies, as envisaged under the Company Fresh Start Scheme (CFSS), 2020. Interestingly the Scheme does not provide relaxation with respect to delayed filing in respect of release of charge. This means in case of delay in filings for release of charge, a company will need to file for condonation of delay. This aspect may be looked at by the Government.