The scheme will not apply for charges that have already been filed before March 1 and for those charges for which the timeline for filing exceeds the mentioned period despite the exclusion.In a major relief to companies that raised funds via the debt route, the ministry of corporate affairs (MCA) has notified a seven month relaxation for filings relating to creation or modification of charges on these instruments as per the Companies Act, according to a circular on Wednesday.
For regulatory filings of charges on property or assets or any undertakings, created on March 1, 2020, the MCA introduced the ‘Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013’, to condone delays in such filings, applicable till September 30.
The ministry’s decision was based on representations it received to relax the timeline to provide a window for compliance with the filing of charges on account of the pandemic and as the benefit of waiver of the additional fees was not extended to charge related filings under the Companies Fresh Start Scheme.
Companies that have raised funds from banks through loans or from investors through debentures have to create a charge on their assets such as property or any undertakings within or outside India to secure these instruments.
“Creation of charge is crucial to such debts but, registering such charges with the Registrar of Companies (RoC) by complying with deadlines falling during the haphazard period of lockdown posed a great challenge,” said Sandeep Jhunjhunwala, partner at Nangia Andersen LLP.
As per section 77 of the Companies Act, the charge must be registered with the RoC within 30 days from its creation or modification. This period can be extended up to 120 days, which would attract late fees.
Under the new scheme, for charges created or modified between March 1 and September 30 this year, including those done earlier but whose filing deadline fell within this period, these seven months would not be counted towards the time limit for filing them.
The scheme is also applicable for the timeline under section 78 which relates to the charge-holder filing the charges with the RoC in case the company fails to do it.
In terms of filing fees, the ministry notification said that for filings made within the mentioned period, fees as on February 29, 2020, will be payable per form. And for filings made beyond this period, fees as on October 1 this year will be payable.
“This move pegs the interest of countrywide investor community while also protecting the companies from a punishable fine of up to Rs 10 lakhs and imprisonment of up to 6 months for its officers in default, on account of filing non-compliances for registering charges,” Jhunjhunwala said.
The scheme will not apply for charges that have already been filed before March 1 and for those charges for which the timeline for filing exceeds the mentioned period despite the exclusion.
Source: indiatimes.com