The government had got several representations from companies, CAs and other stakeholders for the same, sources said.
In a much-needed relief to companies, the Ministry of Corporate Affairs (MCA) has provided relaxation in time for filing forms related to creation of charges. This means firms will have more time to update the Registrar of Companies (RoC) about their fund-raising activities.
The ministry through a notification introduced a scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013. The rationale behind the scheme is that the outbreak of Covid-19 and the ensuing lockdown have disrupted operations of the companies, and more time should be provided to them to meet various statutory norms. The government had got several representations from companies, CAs and other stakeholders for the same, sources said.
Charge is a collateral or secured loan, which a company raises by creating rights on its assets. For creating a charge, a firm has to fill the form, CHG-1, with the RoC within 30 days of its creation. After it is filed, the government provides the company with a certificate of registration.
The new scheme will be applicable for filling forms CHG-l and CHG-9 by a company or a charge holder, where the date of creation or modification of charge is before March 1, 2020, but the timeline (30 days) for filing such form has not expired on March 1; and if it falls on any date between March 1 and September 30, 2020.
“The period from March 1 to September 30 shall not be reckoned for the purpose of counting the number of days, and in case the form is not filed within such period, the first day after February 29, 2020 will be taken as October 1, 2020 for counting such timeline,” the notification said.
Nangia Anderson partner Sandeep Jhunjhunwala said the mid-2020 has forced companies to take the debt route to raise funds that are now crucial to continue business and battle the aftermath of Covid-19 pandemic. “Creation of charge is crucial to such debts, but registering such charges with the RoC by complying with deadlines falling during the haphazard period of lockdown posed a great challenge. A much expected respite has been given by the MCA by relaxing the time.”
Interestingly, a period of seven months beginning March 1 up to September 30 has been relinquished by the MCA for computing the deadline of 30 days for filing the forms relating to creation or modification of charges, saving the domestic companies an extra burden of filing for condonation of delay, Jhunjhunwala explained.
“This move pegs the interest of countrywide investor community while also protecting companies from a punishable fine of up to Rs 10 lakh and imprisonment of up to 6 months for its officers in default, on account of filing non-compliances for registering charges,” he noted.