Practical Issues/ Questions relating to Charges

PRACTICAL ISSUES/ QUESTIONS RELATING TO CHARGES

v  Whether the date of confirmation (or) the date of deposit of title deeds, for extending the immovable property as security is to be taken into consideration at the time of preparation of e-Form?

v  In consortium finance, the lead banker and all other bankers to consortium - file separate Forms for their credit facilities, which reflects higher amount of loan availed by Company in MCA website.

          

          Ex: “A” the lead banker has filed Form for the entire loan of Rs.100 Crores. “B” one         of the lender in consortium files another form for Rs.25 Crores. This leads to increase         in liability of Rs.25 Crores.

v  Many small companies do not reflect the Corporate Guarantee in their Balance Sheet under “Contingent Liability.” Will this affect the disclosure requirements under Accounting standards?

v  Rectification Order is filed through Form INC 28. However, there is no procedure to rectify the defective e-Form. Only on reading both the Forms together, one may know about the rectification.

v  An individual has advanced her/his property as security for the loan availed by Company. In such a case, whether such property details are to be mentioned in e-Form? Bankers are insisting this now a days.

v  In Form CHG 4 - after mentioning the Charge ID and pre-filling, the name of the Charge Holder is sometimes shown and sometimes not.

v  When A gets amalgamated with B, the Corporate Guarantee given by A to B prior to amalgamation is recorded in the Index of Charges of the A and thus, increasing the amount and number of charges in the index of B.

v    The e-form CHG – 1  is prepared within the time limit of 30 days & forwarded to client for their DSC with the option “whether the form is being filed within 30 days” as YES. If the form is received beyond thirty days for filing, it requires changes in the form in this regard.

v  As a stop-gap measure against the issue of registering the DSC of the Bankers, the option “Others” in place of the “BANK” in “Get list of charge holder” is being selected.

v  Time given for filing particulars of Creation / Modification of Charges with the ROC is 300 days (with additional fees) whereas time limit for filing Satisfaction of Charges in only 30 days (No option of payment of additional fees).

v  Form for Creation / Modification / Satisfaction of Charges requires even the Chargeholder to digitally sign the form, which will result in delay.

v  Different dates of execution of instrument creation / modification of charge leads to filing of form separately, i.e, for each date of instrument we need to file a form for Creation / Modification of Charge.

v  For Public Companies, Form MGT-14 also has to be filed for the Board Resolution authorising borrowing of monies, which the Banks do not insist on.

Prepared by:

Mr. Balu Sridhar

AK Jain & Associates, Practising Company Secretary