When a company borrows money against its assets — a term loan, a working-capital facility, an overdraft secured by property or receivables — it creates a charge, and that charge must be registered with the ROC in Form CHG-1 within 30 days. Miss the window and the consequences are serious: the lender's security can become void in insolvency, which is exactly why banks insist on it. This guide explains the process, the fee tiers, and the stakes. For the borrowing resolution that often precedes it, see our guide to MGT-14.
What a charge is
Under Section 2(16) of the Companies Act, 2013, a charge is an interest or lien created on a company's property or assets as security for a loan — and it includes a mortgage, a hypothecation of stock or receivables, and a pledge. In short, when your company pledges an asset to secure borrowing, you've created a charge that the law requires you to register.
CHG-1 and why it matters
Form CHG-1 registers the creation or modification of a charge (other than one relating to debentures, which uses CHG-9), under Section 77 and the Companies (Registration of Charges) Rules, 2014. Registration serves two purposes: it protects the charge-holder — if the company defaults, the lender can enforce its claim against the charged asset — and it creates a public record, so other lenders and stakeholders can see what's already encumbered. The form is signed by both the company and the charge-holder, and either can file it.
The 30-day rule — and the fee tiers if you're late
For charges created on or after 2 November 2018, the clock starts on the date the charge instrument is executed, and the fees escalate the longer you wait:
- Within 30 days — the normal ROC fee only.
- Day 31 to 60 — normal fee plus an additional fee (3× the normal fee for small companies and OPCs; 6× for others).
- Day 61 to 120 — the above plus an ad valorem fee (0.025% of the charge amount, capped at ₹1 lakh, for small companies/OPCs; 0.05%, capped at ₹5 lakh, for others).
- Beyond 120 days — you can no longer file directly; you must seek condonation of delay from the Regional Director/Central Government via Form CHG-8.
The message is simple: register early. A ₹5 lakh ad valorem fee for a large charge is an avoidable, self-inflicted cost.
The certificate you receive
On registering a creation, the Registrar issues a certificate in Form CHG-2; on a modification, in Form CHG-3. Keep the Charge ID from these — you'll need it for any later modification, satisfaction, or receiver filing.
The MGT-14 link
Creating a charge rarely happens in isolation. The board resolution to borrow money and create the charge (under Section 179(3)) must, for a public company, be filed in MGT-14 within 30 days — before or alongside registering the charge in CHG-1. (Private companies are exempt from filing that board resolution, per the 2015 relaxation.) So the usual sequence is: pass the borrowing resolution → (public company) file MGT-14 → register the charge in CHG-1.
Satisfaction of a charge (CHG-4)
When the loan is fully repaid and the charge is discharged, the story isn't over — you must report the satisfaction in Form CHG-4 within 30 days of the payment. The Registrar then issues a certificate of satisfaction in Form CHG-5. Two points that trip people up:
- If the charge is only partially satisfied, you do not file CHG-4 — you file CHG-1 for a modification instead.
- Companies often remember to register the charge but forget to file satisfaction after clearing the loan, leaving a stale charge on their public record that complicates future financing.
The penalties — and the bigger consequence
- For non-registration (Section 86): the company faces a penalty of ₹5,00,000 and every officer in default ₹50,000; wilfully false information can attract action for fraud under Section 447.
- The real risk (Section 77(3)): an unregistered charge is void against the liquidator and other creditors. The debt itself remains valid, but the lender's security becomes unenforceable in insolvency — which can turn a secured lender into an unsecured one. This is why lenders make registration a condition of disbursement, and why timely CHG-1 filing is a financial safeguard, not just a compliance box.
A note for LLPs
CHG-1 is a Companies Act form, for companies (private, public, OPC). An LLP registers its charges under the LLP framework (the LLP charge forms), not CHG-1.
Common mistakes to avoid
- Missing the 30-day window and paying additional or ad valorem fees.
- Not filing satisfaction (CHG-4) after repaying the loan.
- Using CHG-4 for a partial satisfaction — that needs a CHG-1 modification.
- Assuming the lender will file — confirm who's filing; both are responsible.
- Letting a delay cross 120 days — that forces the CHG-8 condonation route.
A note on changing rules
Charge-registration timelines, fees, and forms are amended from time to time. Treat this as a current-position guide and confirm the current fees and process on the MCA portal before filing.
Conclusion
Registering a charge is a small filing that protects a big interest. When your company borrows against its assets, file CHG-1 within 30 days to keep the fees minimal and the lender's security valid — and remember to file CHG-4 when the loan is cleared. An unregistered charge doesn't erase the debt, but it does strip the lender's protection in insolvency, so timely filing keeps both your compliance record and your banking relationships clean.
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FAQs
1. What is Form CHG-1? It registers the creation or modification of a charge — a security interest on a company's assets for a loan — with the ROC, under Section 77. CHG-9 is used instead for charges relating to debentures.
2. What is the deadline to file CHG-1? Within 30 days of creating the charge. It can still be filed up to 60 days with additional fees, and up to 120 days with ad valorem fees; beyond 120 days, condonation via CHG-8 is required.
3. Who files CHG-1 — the company or the lender? It's signed by both the company and the charge-holder, and either can file it. Confirm who's responsible so it doesn't get missed.
4. What happens if a charge isn't registered? The company faces a penalty (₹5,00,000, and ₹50,000 per officer), and — more importantly — the unregistered charge is void against the liquidator and other creditors, so the lender's security becomes unenforceable in insolvency.
5. How do I report that a loan has been repaid? File Form CHG-4 (satisfaction of charge) within 30 days of full repayment; the Registrar issues a certificate in CHG-5. For a partial repayment, file CHG-1 for a modification instead.
6. Do LLPs file CHG-1? No. CHG-1 is for companies. LLPs register charges under the LLP framework using the LLP charge forms.
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Suggested Internal Links
- MGT-14 (Board & Special Resolutions) → `/mgt-14-resolutions-filing/` — anchor: "the borrowing resolution"
- Increase in Authorised Capital (SH-7) → `/increase-authorised-capital-sh-7/` — anchor: "raising capital instead of debt"
- First-Year Company Compliance → `/first-year-compliance/` — anchor: "company compliance essentials"
- DPT-3 (Return of Deposits) → `/dpt-3-return-of-deposits/` — anchor: "reporting your loans in DPT-3"
- Charge Registration Service → `/services/charge-registration/` — anchor: "register your charge with us"
- Company Compliance Service → `/services/company-compliance/` — anchor: "end-to-end secretarial compliance"
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About the author
Regikart CA Team
Chartered Accountants at Regikart. Want to discuss this in the context of your business?
