Satisfaction of Charge 

Introduction to Satisfaction of Charge

Satisfaction of charge is a vital compliance process under the Companies Act, 2013, which signifies that a company has fully repaid the debt or obligation secured by a charge. This process involves filing the necessary forms with the Registrar of Companies (RoC) to formally record that the charge has been satisfied. At ComplyQuick, we offer specialized services to assist companies in efficiently and accurately completing the satisfaction of charge process. This detailed service description outlines the steps, requirements, and compliance measures associated with the satisfaction of charges as specified under the Ministry of Corporate Affairs (MCA) guidelines.

Importance of Charge Satisfaction

Satisfaction of charge is essential for maintaining accurate records and ensuring transparency in a company’s financial dealings. When a charge is satisfied, it indicates that the company has discharged its debt or obligation, which must be formally recorded to update the company’s financial status. Properly documenting the satisfaction of charge helps protect the interests of creditors, investors, and other stakeholders by providing clear evidence of the discharge of liabilities. This process also ensures that the company’s assets are free from encumbrances, which is crucial for future financial planning and borrowing.

Legal Framework and Compliance of Satisfaction of Charge

The satisfaction of charges is governed by the Companies Act, 2013, and the Companies (Registration of Charges) Rules, 2014. Key sections of the Act relevant to the satisfaction of charges include:

• Section 82: Requires companies to give intimation of the satisfaction of any charge registered with the RoC.
• Rule 8 of the Companies (Registration of Charges) Rules, 2014: Details the requirements and process for filing satisfaction of charge.

Process of Satisfaction of Charge

The process of satisfying a charge involves several steps, from the repayment of the debt to the submission of the necessary forms with the RoC. Below is a detailed overview of each step involved in this process:

1. Repayment of Debt

The process begins with the full repayment of the debt or obligation secured by the charge. The company must ensure that it completes this repayment according to the terms and conditions of the charge agreement, making all payments and obtaining acknowledgment from the charge holder upon receipt of the repayment.

2. Board Resolution

Once the debt is repaid, the company’s board of directors must pass a resolution authorizing the filing of the satisfaction of charge with the RoC. The board resolution should clearly state the details of the charge and confirm that the debt has been fully repaid. This resolution must be recorded in the minutes of the board meeting.

3. Filing of Form CHG-4

To record the satisfaction of the charge with the RoC, the company must file Form CHG-4 within 30 days of the satisfaction of the charge. This form includes details such as:

• The date of satisfaction of the charge.
• The particulars of the charge satisfied.
• A declaration by the company confirming the satisfaction of the charge.
• A certificate from the charge holder confirming the receipt of full payment.

The form must be digitally signed by the director, manager, or secretary of the company, and certified by a practicing professional (CA, CS, or CWA).

4. Payment of Fees

The applicable registration fees must be paid along with the submission of Form CHG-4. The fees vary depending on the nominal share capital of the company and the amount secured by the charge. Payment of fees is crucial for the successful submission and processing of the satisfaction form.

5. Verification and Registration by RoC

Upon submission, the RoC verifies the details provided in the form and the attached documents. If the RoC is satisfied with the accuracy and completeness of the information, the satisfaction of the charge is registered, and a Certificate of Satisfaction of Charge (Form CHG-5) is issued. This certificate serves as conclusive evidence that the charge has been fully satisfied and released.

Responsibilities of the Company

The company has several responsibilities to ensure compliance with the statutory requirements for the satisfaction of charges. These include:

• Timely Filing

The company must ensure timely filing of Form CHG-4 for the satisfaction of charges. Delays in filing can attract penalties and result in the charge remaining on record as an encumbrance against the company’s assets.

• Accurate Documentation

Accurate documentation is essential for the successful registration of the satisfaction of charge. The company must ensure that all details provided in the forms and attached documents are correct and complete.

• Maintaining Records

The company must maintain an updated register of charges at its registered office, recording all details of the charges created, modified, or satisfied. This register should be open for inspection by members, creditors, and other stakeholders.

Consequences of Non-Compliance

Non-compliance with the requirements for the satisfaction of charges can have severe consequences, including:

• Penalties

1. Fee for filing e-forms or documents in case of company have share capital

Nominal Share Capital	Fee Applicable Rs.
<1 lakh	200
1 lakh – 5 lakh	300
5 lakh – 25 lakh	400
25 lakh – 100 lakh	500
>100 lakh	600

2. Fee for filing e-forms or documents in case of company not have share capital – Rs 200
3. In case of foreign company – Rs 6,000
4. Additional Fees

Period of delay	Fee Applicable Rs.
Up to 30 days	2 times of normal fees
More than 30 days and up to 60 days	4 times of normal fees
More than 60 days and up to 90 days	6 times of normal fees
More than 90 days and up to 180 days	10 times of normal fees
More than 180 days	12 times of normal fees

• Inaccurate Financial Records

Non-compliance can result in inaccurate financial records, as the charge will continue to be shown as an encumbrance against the company’s assets, affecting the company’s ability to secure future financing.

• Legal Complications

Non-compliance can lead to legal complications, including disputes with creditors and regulatory scrutiny. This can damage the company’s reputation and affect its relationships with lenders and other stakeholders.

Benefits of Professional Assistance

ComplyQuick services for the satisfaction of charges offers several benefits, including:

• Expertise and Knowledge

ComplyQuick has in-depth knowledge of MCA regulations and filing procedures. Our expertise ensures that all statutory requirements are met accurately and efficiently.

• Time and Resource Efficiency

ComplyQuick allows companies to focus on their core business activities while professionals handle the compliance tasks. This saves time and resources and ensures timely and accurate filings.

• Risk Mitigation

ComplyQuick helps mitigate the risk of errors and non-compliance. Our thorough understanding of the regulatory landscape and meticulous approach to data verification and form preparation minimize the risk of penalties and legal complications.

At ComplyQuick, we provide comprehensive services to assist companies in fulfilling their charge satisfaction obligations, ensuring that all regulatory requirements are met efficiently and effectively.

Our expertise in navigating the complexities of the Companies Act, 2013, coupled with our commitment to accuracy and transparency, ensures that your company remains compliant and maintains high standards of corporate governance. Contact us today to learn more about our satisfaction of charge services and how we can support your business in achieving compliance and fostering stakeholder trust.