CHARGE MANAGEMENT
When a business borrows money from a financial institution, the lender needs assurance — a guarantee that their money is safe. That’s where Charge Management comes in — a critical part of corporate compliance that often gets overlooked until an ROC notice lands in your inbox!
Charge Management isn’t just about filing forms; it’s about ensuring your company’s financial credibility and legal security remain intact.
A “Charge” is a form of security interest created on a company’s assets (movable or immovable) to secure a loan or other financial obligation.
Charge Management refers to the creation, modification, satisfaction, and monitoring of such charges and ensuring timely filing with the Registrar of Companies (ROC) as per the Companies Act, 2013.
Why is Charge Management Important?
- Mandatory under Section 77 to 87 of the Companies Act, 2013.
- Helps stakeholders and lenders assess company liabilities.
- Late or incorrect filings can lead to heavy additional fees or legal action.
- Properly managed charges enhance the company’s borrowing reputation.
Documents Required for Charge Management:
- For Creation/Modification of Charge:
- Loan Agreement / Sanction Letter
- Instrument of Charge (like Debenture Trust Deed, Mortgage Deed, Hypothecation Deed, etc.)
- Board Resolution authorizing charge creation
- Particulars of charge (Form CHG-1 or CHG-9)
- Particulars of joint charge holders
- Proof of registration fee payment
- For Satisfaction of Charge:
- Letter from the lender/Bank confirming repayment
- Board Resolution approving satisfaction of charge
- Challan of initial charge creation
- Form CHG-4 duly filed with ROC
- Bank’s NOC (No Objection Certificate)
FAQs
No. Charges are only for secured loans backed by assets.
Legally, the company is responsible, but the bank’s digital signature is also required on CHG-1/CHG-4.
Yes, assets can have pari passu or second charge arrangements, both must be distinctly recorded.
The charge continues to exist and must be dealt with during liquidation or restoration.
CHG-1 is for general charges; CHG-9 is specifically for debentures.
Yes, if it’s secured by company assets. Otherwise, it remains an unsecured loan.
Yes, but only if the lender accepts such assets as security and proper documentation exists.