We keep on receiving queries time and again as to whether Hypothecation of Motor Vehicle can be termed as “charge” and whether this charge is required to be registered?
With the notification of Section 77 Companies Act, 2013, old provisions relating to charge contained in section 125 of the 1956, Act has changed completely. Section 77(1) of the Act has simply changed the list that was provided in the Companies Act, 1956 and requires registration of each and every charge created on the assets of the Company whether tangible or otherwise, and situated in or outside India.
Also, E-Form CHG- 1(Form for registration of charges) contains an option of registering hypothecation of motor vehicle in Field 8(a).
Even MGT-14 is required to be filed with ROC for the Board Resolution passed for this event. (in terms of clause (f) ofSection 179 sub-section 3).
WHETHER CHRGE CREATION IS MANDATD FOR PURCHASE OF MOTOR VEHICLES UNDER 1956 ACT
As per Section 77 of the Companies Act, 2013, it shall be the duty of every company creating a charge within or outside India, on its property or assets (including motor vehicle), situated in or outside India, to register the particulars of the charge with the Registrar within thirty days of its creation. Hence, if your Company has created a charge on a motor vehicle, then it is required to register the charge.
what if a company has taken a vehicle loan in 2019 september from a bank and has not yet registered a charge till now. What are the consequences? How can it be resolved??
It is the duty of the Company to register charges (whether by hypothecation or otherwise) with ROC within 30 days of creation. Further, a charge can be registered within a period of sixty days of such creation, on payment of such additional fees and payment of advalorem fees, if registered beyond 120 days of creation. In your case, the delay has been more than 300 days, hence, in our understanding, the Company is not eligible to make an application for condonation of delay in filing CHG-1 and hence, the charge so created would be considered as ‘unregistered’ and does not give any such rights to the charge holder.
Dear Sir,
As you have mentioned above, as per Companies Act, 2013, considering that all charges are required to be registered in Form CHG-1 including charge created on the tangible or intangible assets, please confirm whether pledge of shares is also required to be registered in Form CHG-1 or not, since actually share certificates belong to the shareholder and not the Company and a request for pledge of shares is received from the shareholder. In such case also, please confirm whether Company is required to register pledge of shares in Form CHG-1 or not.
Please clarify.
Dear Sir,
As you have mentioned above, as per Companies Act, 2013, considering that all charges are required to be registered in Form CHG-1 including charge created on the tangible or intangible assets, please confirm whether pledge of shares is also required to be registered in Form CHG-1 or not, since actually share certificates belong to the shareholder and not the Company and a request for pledge of shares is received from the shareholder. In such case also, please confirm whether Company is required to register pledge of shares in Form CHG-1 or not.
Please clarify.
No, CHG-1 will not be filed in this particular case.
Dear Sir,
As you have mentioned above, as per Companies Act, 2013, considering that all charges are required to be registered in Form CHG-1 including charge created on the tangible or intangible assets, please confirm whether pledge of shares is also required to be registered in Form CHG-1 or not, since actually share certificates belong to the shareholder and not the Company and a request for pledge of shares is received from the shareholder. In such case also, please confirm whether Company is required to register pledge of shares in Form CHG-1 or not.
Please clarify.