Satisfaction of Charge

Charge satisfaction is an essential process that occurs when a company repays its secured loan or the property used as collateral is released from the lender’s hold. Once a charge is satisfied, it is crucial to update this status with the Registrar of Companies (RoC) to reflect the release of assets from encumbrance and ensure compliance. Registering the satisfaction of charge not only clears your company’s financial records but also maintains transparency and builds trust with future lenders.

At IndiaFilings, we help you complete the process effortlessly, ensuring that all necessary documents are filed correctly and on time.

Understanding Charge and Charge Registration

A charge is a legal right created by a company over its assets to secure a loan or financial assistance from banks or financial institutions. This means that the company's assets act as collateral, providing assurance to lenders that they can recover their funds if the loan is not repaid. Once a charge is established, it must be registered with the Registrar of Companies (RoC) to make it legally enforceable. Proper registration of charges is essential for maintaining transparency and protecting the interests of both the company and its lenders. It also facilitates future borrowing by ensuring that financial institutions have accurate information about the company’s encumbered assets.

What is Satisfaction of Charges?

Satisfaction of charges occurs when a company fully repays its secured loan to the lender or when the property or asset used as collateral is released from the charge. Once the charge is satisfied, the company is required to notify the Registrar of Companies (RoC) using the satisfaction of charge form to update the status and remove the charge from the company’s records.

Need for Intimation of Satisfaction of Charges

Intimating the Registrar of Companies (RoC) about the satisfaction of charges is crucial to ensure that the company’s assets and properties are accurately reflected as free from any encumbrance. This update is necessary because banks and financial institutions check the indexation of charges before approving new secured loans.

By notifying the RoC of satisfied charges, the company ensures that its records are up-to-date and demonstrates that there are no outstanding loans secured against its assets, thereby facilitating smoother borrowing and lending processes in the future.

Who Can Apply for Registration of Satisfaction of Charge?

The application for registration of satisfaction of charge can be made by:

• The Company (Creator of the Charge): The company that created the charge is responsible for filing the satisfaction of the charge with the Registrar of Companies (RoC).
• The Charge Holder (Lender): If the company fails to make the application, the charge holder (e.g., bank or financial institution) can file the satisfaction of the charge to ensure that the records are updated and the charge is officially released.

E-Forms Required for Registration of Satisfaction of Charge

The following e-forms are required for the registration of satisfaction of charge:

• CHG-4: Application filed by the company for the registration of satisfaction of charge with the Registrar of Companies (RoC).
• CHG-5: Issued by the Registrar as the Certificate of Registration of Satisfaction of Charge, confirming the release of the charge.
• CHG-8: Application made by the company to the Central Government for condonation of delay if the satisfaction of charge is not registered within 300 days from the date of full payment.
• INC-28: Used to file the order passed by the Central Government (CG) regarding condonation of delay, along with Form CHG-4, to the Registrar of Companies (RoC). 

These are the relevant charge satisfaction forms used to file with ROC. 

Time Limit for Intimation of Satisfaction of Charges

According to the Companies Act 2013, a company must notify the Registrar of Companies (RoC) about the satisfaction of charges within 30 days from the date of full payment of the charge using Form CHG-4, along with the prescribed fees.

Suppose the company fails to make the intimation within this period. In that case, the Registrar may allow the company or charge holder to file the intimation within 300 days from the payment date upon an application. Suppose the company does not notify the Registrar within 300 days. In that case, it must apply to the Central Government (Regional Director) in Form CHG-8 for condonation of delay to update the satisfaction of charge.

Details Required for Registration of Satisfaction of Charge

The following details must be provided when registering the satisfaction of a charge with the Registrar:

• Charge Creation Identification Number: The unique identification number assigned to the charge when it was originally created and registered.
• Particulars of Charge Holder: Details of the charge holder, such as the name and address of the bank, financial institution, or lender.
• Date of Satisfaction of Charge: The date on which the charge was fully satisfied or repaid by the company.
• Particulars of Subsequent Modifications: Any modifications or changes made to the charge since its creation, including changes in terms, value, or conditions.

Documents Required for Registration of Satisfaction of Charge

The following documents are necessary when filing for the registration of satisfaction of charge:

• “No Dues Certificate” from Charge Holder: A certificate issued by the charge holder (e.g., bank or financial institution) confirming that the company has repaid the loan in full and no dues remain.
• Copy of Board Resolution: A resolution passed by the company’s Board of Directors authorizing the registration of satisfaction of charge and appointing an individual to execute the necessary documents.
• Digital Signature Certificate (DSC):
•     DSC of the charge holder (lender)
•     DSC of the company’s Director or authorised person

Procedure for Satisfaction of Charges

The following steps outline the process for notifying the Registrar of Companies (RoC) about the satisfaction of charges, ensuring that the company’s records are updated to reflect the release of assets from any encumbrance:

Step 1: Conduct a Board Meeting

A board meeting should be convened after providing notice to the Board of Directors to pass resolutions for:

• Authorising a director or any other person to intimate the Registrar about the satisfaction of charges on behalf of the company.
• Noting the receipt of the “No Dues Certificate” from the lender, confirming that the debt has been cleared.

Step 2: File Particulars of Satisfaction of Charges

• The company must file the particulars of satisfaction of charges within 30 days from the date of full payment of the debt.
• The information should be filed using Form CHG-4, along with the prescribed fees.

Step 3: Registrar’s Notice to the Charge Holder

• Upon receiving the intimation of satisfaction of charges, the Registrar will send a notice to the charge holder, allowing them 14 days to respond if there are any objections to recording the satisfaction of the charge.
• This step is not required if Form CHG-4 is filed by the charge holder directly.

Step 4: Application for Condonation of Delay (If Applicable)

If the company fails to file the intimation of satisfaction within 30 days, it can apply to the Registrar for condonation of delay:

• Application to the Registrar: If filed within 300 days from the payment date.
• Application to the Central Government (Regional Director): If the intimation is not made within 300 days, the company must apply in Form CHG-8 for approval to file the intimation.

Step 5: Issuance of Certificate of Satisfaction of Charge

• Suppose the Registrar is satisfied with the intimation. In that case, they will enter a memorandum of satisfaction of charge in the register and issue a Certificate of Registration of Satisfaction of Charge in Form CHG-5 to the company, confirming that the charge has been fully satisfied and registered.

This process ensures that the company’s assets are correctly updated as encumbrance-free, facilitating accurate financial records and easier access to future financing.

Simplify Your Charge Satisfaction Registration with IndiaFilings

At IndiaFilings, we specialise in helping companies navigate the complex process of registering the satisfaction of charges with the Registrar of Companies (RoC). Our expert team ensures that all necessary documents, such as the No Dues Certificate and Board Resolution, are prepared and filed accurately. From obtaining approvals to submitting the required forms like CHG-4 and CHG-8, we handle every step to ensure smooth and timely registration. Trust IndiaFilings to manage your compliance needs efficiently so you can focus on growing your business while we take care of the legal formalities.

Contact IndiaFilings today to simplify your charge satisfaction registration process!