Explained: Form CHG-1 for Registering or Modifying a Charge
- adityas41
- Feb 6
- 8 min read
Imagine you're a company looking to secure a loan or finance to fuel your growth. As part of the lending process, your lender may require you to offer some of your company's assets as collateral. This collateral acts as a security for the lender, giving them the right to seize and sell those assets if you fail to repay the loan as agreed. In legal terms, this security interest created on your company's assets is known as a "charge."

Now, here's the important part: whenever a charge is created, modified, or satisfied (i.e., when the loan is fully repaid), companies in India are required to inform the Registrar of Companies (ROC) about it. This is where Form CHG-1 comes into play. Form CHG-1 is used to register or modify charges with the ROC, ensuring that these financial transactions are properly recorded and disclosed.
In this comprehensive guide, we'll dive deep into Form CHG-1, understand its purpose, and walk through the process of filling and filing it. We'll explore the different types of charges, the time limits for filing the form, and the consequences of non-compliance. By the end of this article, you'll have a clear grasp of how to handle the charge registration and modification process using Form CHG-1.
So, let's get started on this journey of understanding charges and mastering Form CHG-1!
Understanding Charges
Before we jump into the nitty-gritty of Form CHG-1, it's crucial to have a solid understanding of what charges are and why they matter. Let's break it down.
What is a Charge?
In simple terms, a charge is a legal right or interest that a lender (also known as a charge holder) has over a borrower's assets. It gives the lender the authority to seize and sell those assets if the borrower defaults on their loan or fails to meet the agreed-upon terms.
Think of a charge as a safety net for the lender. Just like how a safety net protects acrobats in case they fall, a charge protects the lender's interests in case the borrower can't repay the loan.
Types of Charges
There are two main types of charges:
Fixed Charge: A fixed charge is created on specific, identifiable assets of a company, such as land, buildings, machinery, or intellectual property. The company cannot sell or transfer these assets without the lender's consent.
Floating Charge: A floating charge is created on a company's general assets, such as inventory, receivables, or cash. Unlike a fixed charge, the company can continue to use and sell these assets in the normal course of business. The charge only crystallizes (i.e., becomes fixed) when certain events occur, such as default or liquidation.
Why are Charges Important?
Charges play a vital role in corporate finance and have significant implications for both borrowers and lenders. Here's why:
Access to Credit: Charges enable companies to access credit by offering their assets as collateral. This can be especially helpful for small and medium-sized enterprises (SMEs) that may not have a long credit history or strong financials.
Lender Protection: Charges provide a layer of protection for lenders, reducing their risk in case the borrower defaults. This security can lead to better loan terms, such as lower interest rates or longer repayment periods.
Transparency: By requiring companies to register charges with the ROC, the law ensures transparency and disclosure of these financial transactions. This information is public and can be accessed by investors, creditors, and other stakeholders.
Priority in Liquidation: If a company goes into liquidation, charge holders have a higher priority in the distribution of assets compared to unsecured creditors. This means they have a better chance of recovering their money.
Now that we have a good grasp of charges and their significance, let's move on to the star of the show - Form CHG-1.
What is Form CHG-1?
Form CHG-1 is the prescribed form under the Companies Act, 2013, for registering or modifying charges with the ROC. It's an e-form that needs to be filed electronically on the MCA (Ministry of Corporate Affairs) portal.
Purpose of Form CHG-1
The primary purpose of Form CHG-1 is to ensure that all charges created, modified, or satisfied by a company are properly recorded and disclosed to the ROC. This includes charges on various types of assets, such as:
Land and buildings
Plant and machinery
Movable property
Intangible assets (e.g., goodwill, patents, trademarks)
Floating charges on the undertaking or any property of the company
Shares and securities
By filing Form CHG-1, companies are fulfilling their statutory obligation under the Companies Act and maintaining transparency in their financial dealings.
When to File Form CHG-1
Form CHG-1 needs to be filed in two main scenarios:
Creation of a New Charge: When a company creates a new charge on any of its assets, it needs to file Form CHG-1 with the ROC within 30 days of the charge creation date. This includes charges created in favor of banks, financial institutions, debenture trustees, or any other lenders.
Modification of an Existing Charge: If there are any changes to an existing charge, such as a change in the loan amount, interest rate, repayment terms, or the assets charged, the company needs to file Form CHG-1 to reflect these modifications. The form should be filed within 30 days of the modification date.
It's crucial to adhere to these time limits to avoid any late filing fees or legal consequences. In case of any delay beyond 30 days, the company needs to seek condonation of delay from the Central Government by filing Form CHG-8 along with the prescribed fees.
Now that we know when to file Form CHG-1, let's understand how to fill it up correctly.
How to Fill Form CHG-1
Form CHG-1 is divided into several sections, each capturing specific details about the company, the charge holder, and the charge itself. Let's walk through each section step by step.
Section 1: Company Details
In the first section, you need to provide basic information about your company, such as:
Corporate Identification Number (CIN)
Company name
Registered office address
Email ID
Make sure to enter the correct CIN and email ID, as these will be used for all official communications related to the form.
Section 2: Charge Details
This section requires you to provide comprehensive details about the charge being created or modified. This includes:
Type of charge (fixed or floating)
Date of creation or modification
Amount secured by the charge
Brief particulars of the principal terms and conditions, including tenure and interest rate
Details of the property or assets charged (description, location, value)
Name and address of the charge holder
Double-check all the information for accuracy, especially the dates and amounts, as any discrepancies can lead to the form being rejected.
Section 3: Particulars of the Instrument Creating or Modifying the Charge
In this section, you need to provide details of the document that creates or modifies the charge, such as a loan agreement, debenture trust deed, or mortgage deed. This includes:
Date of the instrument
Description of the instrument
Date of execution of the instrument
Details of the stamp duty paid on the instrument
Make sure to have the instrument handy while filling this section, as you'll need to refer to it for accurate information.
Section 4: Attachments
Form CHG-1 requires you to attach certain mandatory documents, such as:
A certified true copy of the instrument creating or modifying the charge
Proof of payment of stamp duty on the instrument
Board resolution authorizing the creation or modification of the charge
Charge holder's letter of consent (in case of modification)
Other documents as may be required based on the nature of the charge
Ensure that all the attachments are clear, legible, and properly scanned. Poor quality or missing attachments can lead to the form being rejected.
Section 5: Declaration
The final section of Form CHG-1 requires a declaration from an authorized signatory of the company, stating that:
The information provided in the form is true and correct to the best of their knowledge
All the attachments are complete and legible
The company has complied with all the provisions of the Companies Act and the rules made thereunder
The signatory needs to provide their name, designation, and Digital Signature Certificate (DSC) to authenticate the form.
Filing Form CHG-1
Once you've filled up all the sections and attached the necessary documents, you're ready to file Form CHG-1. Here's a quick rundown of the filing process:
Access MCA Portal: Log in to the MCA portal using your company's credentials.
Select Form CHG-1: Navigate to the "Company Forms Download" page and select "Form CHG-1" from the list of forms.
Fill the Form: Fill in all the required information in the form as per the instructions provided. Double-check all the details for accuracy.
Attach Documents: Attach all the mandatory documents in the prescribed format and size.
Pay Fees: Pay the prescribed filing fees online using a credit card, debit card, or net banking facility.
Digital Signature: Have the authorized signatory affix their DSC to the form to authenticate it.
Submit the Form: Review the form and attachments carefully, then submit the form online.
The MCA will process your form and, if everything is in order, approve the charge registration or modification. You'll receive a confirmation email once the process is complete.
Consequences of Non-Compliance
Failing to file Form CHG-1 within the prescribed time limits or not filing it at all can have serious consequences for the company and its officers. Some of these consequences include:
Late filing fees of Rs. 100 per day until the form is filed
Rejection of the form by the ROC, requiring the company to re-file it with the correct information and attachments
Prosecution of the company and its officers for non-compliance with the Companies Act
Difficulty in obtaining future loans or financing, as lenders may view the company as non-compliant or high-risk
Reputational damage, as the company's non-compliance will be a matter of public record
To avoid these consequences, it's crucial to stay on top of your charge registration and modification obligations and file Form CHG-1 accurately and on time.
Key Takeaways
A charge is a security interest created on a company's assets in favor of a lender, giving them the right to seize and sell those assets if the company defaults on its loan.
Companies in India are required to register and modify charges with the ROC using Form CHG-1.
Form CHG-1 needs to be filed within 30 days of the creation or modification of a charge. Delay beyond this period requires condonation from the Central Government.
The form has several sections that capture details about the company, the charge holder, the charge itself, and the instrument creating or modifying the charge.
Certain mandatory documents need to be attached with the form, such as the instrument copy, stamp duty proof, and board resolution.
Non-compliance with charge registration and modification requirements can lead to financial and legal consequences for the company and its officers.
Conclusion
Navigating the world of charges and their registration can be complex and overwhelming, especially for growing companies with multiple financial obligations. However, understanding and complying with the requirements of Form CHG-1 is crucial to maintain the company's good standing and access to credit.
This is where Fiscal Flow comes in as your trusted partner in compliance. Our team of experts can guide you through the entire process of charge registration and modification, from understanding the requirements to filling up Form CHG-1 accurately and filing it on time.
We understand that every company's situation is unique, and we offer personalized solutions tailored to your specific needs. Whether you're creating a new charge, modifying an existing one, or seeking condonation for a delayed filing, Fiscal Flow can help you navigate the complexities and ensure seamless compliance.
In addition to Form CHG-1, Fiscal Flow offers comprehensive compliance services for companies, including incorporation, annual filings, changes in directors and shareholders, and much more. Our goal is to simplify the compliance process for you, so you can focus on growing your business while we take care of the paperwork.
If you have any questions about Form CHG-1, charge registration, or any other compliance matters, our team is here to help. Get in touch with us today to learn more about how we can support your company's compliance journey.
Remember, compliance is not just a box to tick – it's a foundation for building trust, credibility, and long-term success. With Fiscal Flow by your side, you can face the challenges of compliance with confidence and clarity.
So, let's work together to master Form CHG-1 and all your compliance needs. With the right knowledge and the right partner, you can transform compliance from a burden into an opportunity for growth and success.