Recent changes in Charges registration : Companies (registration of charges) amendment rules 2019 by CS Shweta Dubey


Filing of Charges - Harsh on late risers

MCA vide the notification dated 31.07.2019 notified the Companies Amendment Act, 2019. Apart from some sections, most of them are applicable retrospectively w.e.f. 2nd November, 2018. The norms regulating the filing of Charges have been accordingly modified and the new set of additional fee and the timelines are stringent than the previous ones.

As per Section 77 of the Companies Act, 2013 it is the duty of every company to register the creation/ modification of charges within 30 days of such creation/modification. After the prescribed time period, the form can be filed after paying additional fee was as per the Companies (Registration Offices and Fees) Third Amendment Rules, 2014.

However, MCA vide the Ordinance dated 02nd November, 2018 and another notification dated 30th April, 2019 modified the timeline and the Additional Fee payable on the Charges created or modified, respectively.

Pre Amendment Regime:

Charges created/ modified before the commencement of the Ordinance Amendment i.e. 2nd November, 2018:

Any charge created/modified before 02nd November, 2019 shall be filed by the Company within 30 days of such creation/modification. If the same is not filed within the said time limit then the Registrar may on application allow to file within 300 days of such creation.

However, if the registration has not been completed within 300 days of creation, then the same shall be filed within 6 months of the Commencement of the Amendment provisions i.e. from 02nd November, 2019 after paying the advalorem fee as prescribed (discussed later)

Maximum Time limit to register charge = 300 days+6 months from 02nd November, 2019

Post Amendment Regime:

Charges created/ modified on or after 02nd November, 2019

If the Charges created/modified on or after 02nd November, 2019 and not filed within 30 days of creation/ modification, then the Registrar can allow to file the form within 60 days of such creation.

If the Registration is not made within the specified timeframe, then the Registrar can allow to register such creation within further 60 days with the payment of prescribed advalorem fee.

Maximum Time limit for registration = 30+30+60=120 days from the date of creation/modification.

Modified Fee Structure:

The modified Additional fee has been compared with the normal fee structure for giving a clarity of change.

MCA in its notification dated 30th April 2019 inserted Item E- Fees for filing charge documents Companies (Registration Offices and Fees) Rules, 2014.

The Charges created/modified on or before 02nd November, 2019, the additional fee shall be payable in the following manner:

Delay in Registration

Additional/Advalorem fee applicable

Upto 30 days

2 times of Normal Fee

More than 30 days but less than 60 days

4 times Normal fee

More than 60 days but less than 90 days

6 times Normal Fee

More than 90 days but less than 180 days

10 times Normal Fee

More than 180 days

12 times Normal fee


Similarly, if the charges created /modified on or after 02nd November, 2019, then

i) applicable additional fee payable till 31.07.2019 shall be, in the following manner:

Delay in Registration

Additional/Advalorem fee applicable

Upto 30 days

2 times of Normal Fee

More than 30 days but less than 60 days

4 times Normal fee

More than 60 days but less than 90 days

6 times Normal Fee


ii) W.e.f 01st August, 2019, the Additional Fee/ Advalorem Fee shall be payable as:

Delay in Registration

Additional/ Advalorem fee applicable

Upto 30 days

6 times of Normal Fee

More than 30 days but less than 90 days

6 times Normal fee + Advalorem Fee 0.05% (Maximum can be Rs. 500000)


Illustration:

Suppose, a Company with a Nominal Share Capital of Rs. 50,00,000

  1. Created a Charge of Rs.20,00,000 on 01st May, 2018

Since the Charge is created before the Amendment Regime, the Registration can be made by maximum upto 01st May, 2019 with Advalorem fee

Within 30 days – 30th May 2018

Within 300 days- 24th February, 2019

Within six months from commencement of The Amendment Act – 01st May, 2019

  1. Charge of Rs. 2,00,00,000 created on 01st May, 2019, the Registration can be made upto 28th August, 2019.

The Additional Fee Payable in this case shall be:

Delay

Additional/ Advalorem fee applicable

Calculation

Total Additional Fee payable

Upto 30 days

6 times of Normal fee

6*300 = 1800

1800

More than 30 days but less than 90 days

6 times Normal fee + Advalorem Fee 0.05% (Maximum can be Rs. 500000)

6*300=1800

0.05%*Rs.20000000=Rs. 1000000

 

 

1800

500000

 

 

 

 

 

 

Maximum Limit is Rs. 500000

503600

Conclusion:

Seeing the heavy Additional Fee and narrow timelines, the Companies and the Charge holders are now bound to register the charges as and when created or modified to avoid the extra burden of Advolarem fee.

Sources:

http://www.mca.gov.in/Ministry/pdf/AMENDMENTACT_01082019.pdf

http://www.mca.gov.in/Ministry/pdf/CompRegistrationOfficesFeesThirdAmend_01052019.pdf

http://www.mca.gov.in/Ministry/pdf/CompaniesRegistrationChargesAmendRule_01052019.pdf

 

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