PROVISIONS APPLICABLE TO PRIVATE LIMITED COMPANY UNDER THE NEW COMPANIES BILL 2013:

PROVISIONS  APPLICABLE TO PRIVATE LIMITED COMPANY UNDER THE  NEW  COMPANIES  ACT  2013:

A quick perusal of the Companies Bill 2013 shows that many exemptions given to Private limited companies under Companies Act are withdrawn. .  The following provisions are applicable to Private limited companies under the new Companies Bill 2013.

Maximum Number of members

There is no change in the minimum number of member which is 2. The maximum number the members in a private limited company are increased from 50   members to 200 members. (Clause 2 sub section (68)).

Financial Year for the Balance Sheet

 Financial year of the balance sheet will be 31st march for all the companies.

   For any relaxation approval from NCLT is required.  (Clause 2 sub section (41)).

Further Issue of Shares

    

The exemption given to private limited companies regarding further issue of shares is withdrawn. Further issue of shares under section 81 applicable to both private and public limited companies. Valuation  of shares  shall be done based on the certificate issued by registered valuer subject to such conditions as may be prescribed. (Clause 62)

Certification for Annual Return

         Annual Return must be certified by a Practicing company secretary and requirement of compliance certificate by practicing company secretary is dispensed with. The annual return should contain particulars like: 

  (a) The extract of the annual return as provided under sub-section (3) of sec 92.    

  (b) Number of meetings of the Board.

  (c) Directors’ Responsibility Statement;

  (d) A statement on declaration given by independent directors under sub-section.

   

And also PCS to certify that all the provisions of the Companies Act has been complied with (Clause 92)                                                                                                                                          

Number of days of Notice of General Meetings.                                                                                                           

For private limited company as per the existing Companies Act is even seven days notice is sufficient. This exemption is withdrawn.   As per the New Provisions 21 clear days notice has to be given to the shareholders and the notice can be given by electronic mode also. (Clause 101).

Postal ballot for passing the Resolutions                                                                                                                 

Till now postal ballot is applicable only for listed companies. Postal ballot is applicable to private limited companies also for certain transactions after the  amendment  prescribed by the central government by notification. (Clause 110).

Board Report to give  more details  

The Board report shall contain the following information (Clause 134(3)

                              (a) The extract of the annual return

                              (b) Number of meetings of the Board;

                              (c) Directors’ Responsibility Statement;

                              (d) a statement on declaration given by independent directors

                              (e) Company’s policy on directors’ appointment and remuneration    

                                    including    criteria for determining qualifications, positive

                                    attributes, independence  of   a director and other matters if

                                    required by Section 178 provided under       sub-     section (3) of

                                    section 178;

      (f) Explanations or comments by the Board on every qualification,  reservation or adverse remark or disclaimer made—

                                          (i) by the auditor in his report; and

                                         (ii) by the company secretary in practice in his secretarial audit

                                               report;

                              (g) Particulars of loans, guarantee s or investments

                              (h) Particulars of contracts or arrangements with related parties

                                    referred to in sub-section (1) of section 188 in the prescribed

                                   form;

                               (i) The state of the company’s affairs;

                               (j) The amounts, if any, which it proposes to carry to any reserves;

                              (k) The amount, if any, which it recommends should be paid by way

                                    of   dividend;

                    (l) Material changes and commitments, if any, affecting the financial              position   of the company which have occurred between the end of the financial year   of the company to which the financial statements relate and the date of the report;

                             (m) The conservation of energy, technology absorption, foreign

                                    Exchange earnings and outgo, in such manner as may be

                                    prescribed;

                              (n) a statement indicating development and implementation of a risk             

                                    management policy for the company including identification

                                    therein of  elements of risk, if any, which in the opinion of the

                                    Board may threaten the existence of the company;

                               (o) The details about the policy developed and implemented by the

                                    Company on corporate social responsibility initiatives taken

                                    during the year;

                               (p) In case of a listed company and every other public company

                                     having such paid-up share capital as may be prescribed, a

                                     statement indicating the  manner  in which formal annual

                                     evaluation has been made by the Board of its own performance

                                     and that of its committees and individual directors;

                               (q) Such other matters as may be prescribed.

Corporate Social Responsibility.

Every company having net worth of rupees five hundred crore or more, turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility (CSR) Committee of Board consisting of three or more directors, out of which at least one director shall be an independent director and 2 per cent of the average net profits of the immediately preceding three financial years should be spent for CSR (Clause 135). Schedule VII prescribes the activities to be included under Corporate Social           

Responsibility which is given below:

SCHEDULE VII

Activities which may be included by companies in their Corporate Social                                                                                     Responsibility Policies

                Activities relating to:—

                         (i) Eradicating extreme hunger and poverty;

                        (ii) Promotion of education;

                       (iii) Promoting gender equality and empowering women;

                       (iv) Reducing child morality and improving maternal health;

                       (v) Combating human immunodeficiency virus, acquired immune

                             deficiency syndrome, malaria and other diseases;

                      (vi) Ensuring environmental sustainability;

                     (vii) Employment enhancing vocational skills;

                    (viii) Social business projects;

                      (ix) Contribution to the Prime Minister's National Relief Fund or any other

                            fund set up by the Central Government or the State Governments for

                            socio-economic development and relief and funds for the welfare of

                            the Scheduled Castes, the Scheduled Tribes, other backward classes,

                            minorities and  women; and

                    (x) such other matters as may be prescribed.

Appointment of Auditors

                 A. An auditor will be appointed in the first annual general meeting for a five-year term. Thereafter, the auditor will be changed as per the members’ decisions.

                 b. Secondly, an audit firm cannot be re-appointed for more than two five-year terms. (i.e. 10 years)  For re-appointment purposes for the individual auditor or audit firm, there has to be a gap of five years. Moreover, for appointment or re-appointment purposes, there should be no common partners between the new firm and old audit firm. Another interesting clause is that members can resolve to ask the audit firm to rotate the audit partner and team every year. 

                  The company shall inform the auditor concerned of his or its appointment, and also file a notice of such appointment with the Register within fifteen days of the meeting in which the auditor is appointed. Every company shall comply with the requirements of this sub-section within three years from the date of commencement of this Act. (Clause 139)

Appointment of Internal Auditor

             Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a Chartered Accountant or a Cost Accountant or such other professionals as may be decided by the Board conduct internal audit of the functions and activities of the company. (Clause 138).

 Duties of Directors

          

A.               A director of a company shall act in good faith in order to promote the object of the company.

B.                A director of a company shall exercise his duties with due care, skill and diligence.

C.                A Director of a company shall not assign his office and any assignments so  made shall be void.

D.      If a director of the company contravenes the   provisions of this section such director shall be punishable with fine which shall not be less than Rs.1, 00,000/- but which may extend to Rs.5, 00,000/- (Clause 166).

Borrowing Powers   

                                                                                                              

The exemption given to private limited company for borrowings under section.293 is withdrawn. Borrowing powers now require approval by shareholders and applicable to both private and public limited companies.  (Clause180).

Loan and Investment

                The exemption given to private limited company under Section 372A regarding loan and investment is withdrawn.  Existing limit of 60% Paid up capital and free reserves or 100% of free reserves applicable to both private limited and public limited companies.(Exemption to private limited Company for loan and investment under section372A is removed now)  (Clause 186).

 Related party Transactions

        

           Only with the consent of the Board of Directors given by a resolution at a meeting of  the Board and subject  to such conditions as may be prescribed   no company shall  enter into any contract or arrangement with a related party             with respect to—

                       (a)   Sale, purchase or supply of any goods or materials;

                        (b)  Selling or otherwise disposing of, or buying, property of any kind;

                       (c)   Leasing of property of any kind;

                       (d)  Availing or rendering of any services;

                       (e)  Appointment of any agent for purchase or sale of goods, materials,  

                             services or  product.

                       (f) Such related party's appointment to any office or place of profit in the                                 company, or its subsidiary company or associate company.

        No contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions not exceeding such sums, as may be prescribed, shall not be entered into except with the prior approval of the company by a special resolution. Further that no member of the company shall not vote on such special   resolution to approve any contract or arrangement which may be entered into by the company, if such member is a related party. (Clause 188).

Loan to Directors

The exemption given to the Private Limited Company under section 295 regarding loan given to director of a private limited of company is withdrawn. Loan should not be given to directors of any company including private limited company or to any private company in which a director is a director or member (Clause 185).

Appointment of Key Managerial Personnel

Appointment of Key Managerial Personnel – Every company belonging to such     class or description of companies as may be prescribed shall have the following whole time Key Managerial Personnel (Clause 203).

1.      Managing Director or Chief Executive Officer or Manager and in

  their  absence a Whole Time Director.

                             2. Company Secretary and;

                             3. Chief Financial Officer.

Secretarial Audit Report

Every listed company and company belonging to other class of companies as may be prescribed shall annex with its Board’s report a secretarial audit report given by Practicing Company Secretary in such form as may be prescribed. (Clause 204).

Director to stay in India for 182 days

 Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year. Every company existing on or before the date of commencement of this Act   shall, within one year from such commencement or from the date of notification of the rules in this regard as may be applicable, comply with the requirements of this provision (Clause 149(3)).

Board and Annual General Meeting minutes

   Hereafter the companies shall follow the Secretarial Standards while making the minutes of Board and General Meeting. (Clause 118 (10))

  Books of Accounts

             The Books of Accounts may be kept in electronic form also. (Clause 128)

Managing Director.

The exemption given to private limited company under section 269 for appointment of Managing Director is withdrawn. Provision relating to the appointment of Managing Director is also applicable to the private limited companies (Clause 196).

A comparison is made with respect to exemptions given in the Companies Act, 1956 and new Companies Bill 2013. The following are the exemptions available to Private Limited Companies in Companies Act 1956 and its status in New Companies Act 2013

S.No	Existing Section in Companies Act, 1956.	Nature of exemptions in the Companies  Act, 1956.	Status in Companies Act 2013
1.	Section 77(2)	Financial assistance can be given for purchase of or subscribing for its own shares in its holding company, Whereas not applicable to Public company	Clause 67 – Restrictions on purchase by Company or giving of loans by it for purchase of its shares. Private limited company not specifically mentioned in the clause. Hence exemption is available.
2.	Section 81(3)	Further shares can be issued without passing special resolution or obtaining central government’s approval and without offering the same necessarily to existing shareholders	Clause 62 – Further issue of shares now applicable to Private limited Company also. Exemption is withdrawn.
3.	Section 149(7)	Exemption from Certificate of Commencement of business	Clause 11 – Commencement of business declaration has to be filed by Private Limited Company. Exemption is withdrawn.
4.	Section 198(1)	No restriction on the payment of Managerial Remuneration on net profits	Clause 197 – Overall maximum managerial remuneration applicable to Public Company. For Private Limited Company this section is not applicable. Exemption is withdrawn.
5.	Section 252(2)	Need not have more than two directors	Clause 149 – Minimum two directors. There is no change in the existing provisions. Exemption continues.
6.	Section 255(1)	A proportion of directors need not retire every year	Clause 152 – The exemption continues but as per the AOA of the Company.
7.	Section 257(2)	Statutory notice, etc., is not required for a person to stand for election as a director	Clause 160 – Exemption is withdrawn.
8.	Section 259	Central Government’s sanction is not required to affect increase in the number of directors beyond 12 or the number fixed by articles of association	Clause 149 – The Company to have Board of Directors. Exemption given now to maximum of 15 Directors.
9.	Section 263(1)	In passing resolution for election of directors, all directors can be appointed by a single resolution.	Clause 162 – Appointment of directors to be voted individually. Exemption is withdrawn. Single resolution for the appointment of directors can be passed both by private and public company provided, a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it.
10.	Section 264(3)	Consent to act as director need not be filled with registrar	Clause 152 – Appointment of directors. Exemption removed. Private Limited Companies also to file consent. Exemption is withdrawn.
11.	Section 269(2)	Central Government’s approval is not required for appointment of managing or whole-time director or manager	Clause 196 – Exemption is withdrawn. Applicable to Private Limited Companies
12.	Section 275 to 279	Restrictive provisions regarding total number of directorships which any person may hold do not include directorships held in private companies which are not subsidiary of public company	Clause 165 – The maximum number of companies in which a director can hold office is 20 companies. Out of this he can hold only up to 10 public companies. There is no restriction for private limited companies. One can become director in 20 private limited companies. Exemption is withdrawn.
13.	Section 293(1)	Certain restrictions on powers of board of directors do not apply	Clause 180 – Exemption is withdrawn.
14.	Section 295(2)	Prohibition against loans to directors does not apply	Clause 185 – Exemption is withdrawn. Loan to directors applicable to private limited company
15.	Section 300(2)	Prohibition against participation in board meetings by interested director does not apply	Clause 184 – Exemption is withdrawn. Disclosure of directors interested applicable to private limited company.
16.	Section 303(1)	Date of birth of director need not be entered in the register of directors	Clause 170 – Register of directors and key managerial personnel and their shareholding. Exemption is withdrawn. Anybody can view the particulars of the directors through their DIN numbers.
17.	Section 309(9)	There is no restriction on remuneration payable to directors	Clause 197 – Overall maximum managerial remuneration applicable to Public Company. For Private Limited Company this section is not applicable. Exemption continues.
18.	Section 316(1)	No restriction on appointment of managing director	Clause 203 – Appointment of Key Managerial Personnel. Exemption is withdrawn.
19.	Section 349	Provisions relating to method of determination of net profits and ascertainment of depreciation do not apply	Clause 198 – Calculation of Profits. Exemption is withdrawn.
20.	Section 372(A)	No prohibition against purchase of shares, etc., in other companies	Clause 186 – Exemption is withdrawn. Applicable to Private Limited Companies

The following provisions which exempted private limited companies have been deleted in the Companies Act, 2013.

S.No	Existing Section in Companies Act, 1956.	Particulars	Status in Companies Act 2013
1.	Section 70(3)	Statement in lieu of prospectus need not be delivered to the registrar before allotting shares	No provisions exist
2.	Section 90(2)	Provisions as to kinds of share capital (sec.85), further issue of share of capital(sec.86), voting rights(sec 87), issue of shares with disproportionate rights (sec 88) and termination of disproportionate excessive rights (sec 89)	No provision exist
3.	Section 165(10)	Exemption from Statutory Meeting and Statutory Report	No provision exist
4.	Section 170(1)	Articles of private company having provisions relating to general meetings without being subject to the provisions of sections 171 to 186	No provision exist
5.	Section 204(6)	Can appoint a firm or body corporate to an office or place of profit under the company	No provision exist
6.	Section 266(5)	Restriction on appointment or advertisement of directors as regards consent and qualification of shares does not apply.	No provision exist
7.	Section 268	No Central Government approval to modify any provision relating to appointment of managing, whole-time or non-rotational directors	No provision exist
8.	Section 273	No share qualification u/s 270 for Directors of a private company.	No provision exist
9.	Section 310	No Government approval for change in restriction on remuneration to directors	No provision exist
10.	Section 311	No central government approval for increase in the remuneration beyond specified limit of directors on an appointment or reappointment	No provision exist
11.	Section 317(4)	No restriction on appointment of managing director	No provision exist
12.	Section 350 & 355	Provisions relating to method of determination of net profits and ascertainment of depreciation do not apply	No provision exist.
13.	Section 370(2)	No restriction on making loans to other companies	No provision exist
14.	Section 388A	Provisions of sections 386 and 387, which restrict the number of companies of which a person can be appointed as manger, remuneration of the manager, etc., and also provisions of  sections 269, 310,311,312 and 317, do not apply	No provision exist
15.	Section 409(3)	Central Government cannot exercise its power to prevent change in board of directors which is likely to affect the company prejudicially	No provision exist
16.	Section 416(1)	Person can enter into contract on behalf of company as undisclosed principle and need not give intimation to the other directors	No provision exist

In addition to the above Clause 190 of the Companies Bill 2013 regarding keeping of Contracts of employment entered with whole time directors is not applicable to Private Limited Companies.

Rules to clarify the clauses be to be published by MCA shortly:

The rules relating to annual return, secretarial audit, Postal Ballot, Related Party Transactions, auditors, etc will be notified by the Government shortly. Thereafter the clauses under the new Companies Act will have more clarity.

  

Need for Amendment of Articles of Association of private limited company:

           Sec 171 to 186 sections which are not applicable to Private Limited companies is now deleted in the Companies Bill.  Hence, after Companies Act, 2013, comes into effect, it may require to

                             

  the article of association of Private Limited by substituting the new set of article of association so that it will not contain any contrary provision of the Companies Act, 2013.

          In view of the above the private limited companies are to follow many provisions which are applicable now. 

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CREATION, MODIFICATION AND SATISFACTION OF CHARGE UNDER THE COMPANIES ACT 1956

CREATION, MODIFICATION AND SATISFACTION OF CHARGE UNDER THE COMPANIES ACT 1956

All the companies borrow money for the purpose of its business. When they borrow money the lender normally insists for securities. The lender may be a Bank or a Company registered under the Companies Act 1956 or a Foreign Company or a Body Corporate.

Whenever any security is given for the purpose of obtaining loan a charge is created in favour of the lender. The loan may be borrowed by one charge holder or it may be from two charge holders or more as in case of consortium. Whenever any loan is taken on consortium, the Banks normally insists creation of charge separately in respect of all charge holders.

In accordance to Section 125 when a charge in respect of security on the company’s property or undertaking if not created is void against the liquidator. In view of this the charge holder is to ensure registration of charge of the property provided as security for the loan given. In case if it is not done the charge holder looses his right to claim the sale proceeds of the property in case of default by the borrower. In other words, the charge holder who has given the money later but his charge is registered first will have priority over the other charge holders in case of settlement of loan by sale of property.

CHARGES TO BE REGISTERED UNDER SECTION 125(4) OF COMPANIES ACT 1956:

As per section 125(4) of the Companies Act 1956, the following charges are required to be filed with the Registrar of Companies (ROC).

1.       a charge for the purpose of securing any issue of debentures;

2.       a charge on uncalled share capital of the company;

3.       a charge on any immovable property, wherever situate, or any interest therein;

4.       a charge on any book debts of the company;

5.       a charge, not being a pledge, on any movable property of the company

6.       a floating charge on the undertaking or any property of the company including stock in trade

7.       a charge on calls made but not paid;

8.       a charge on a ship or any share in a ship;

9.       a charge on goodwill, on a patent or a license under a patent, on a trade mark, or on a copyright or a license under a copyright.

MODIFICATION OF CHARGE:

A modification of the loan amounts to charge. And particulars of modification are required to be filed with Registrar of Companies (ROC) in Form 8. Once a new charge is registered charge id will be created. The same can be viewed through index of charges option in the MCA website.

The Form 8 has to be filed within 30 days from the date of creation of charge or modification of charge. Another 30 days is given as a grace period for the filing of Form 8 with additional fees. In other words, form 8 has to be filed within 60 days from the date of creation of Charge or modification of charge failing which application for Condonation of delay has to be made to the concerned Regional Director, department of company affairs.

FORM 8 AND ROC FILING:

The steps for filing form 8 is given below

1.       To fill up the CIN no or Foreign Company Registration no (FCRN) and click prefill option

2.       To select whether creation of charge or modification of charge.

3.       In case of modification, fill up the charge id

4.       To fill up whether the charge is in favour of Asset Reconstruction Company or whether the charge is assigned based on an assigned agreement.

5.       To click the type of charge

a. Uncalled Share Capital                             g. Floating Charge

b. Immovable property                                 h. Calls made but not paid

c. Any interest in immovable property         i. Ship

d. Book debts                                                j. Good will

e. Movable property not being a pledge       k. Patent, license under patent

f. Trademark                                                 l. Copyright or license under copyright

                                                                      m. Others

6.       If the type of charge is others, the nature of charge has to be mentioned

7.       Whether Consortium of charge is involved

8.       Whether joint charge is created

In case of item no. 7 the particulars of other charge holder and in case of item no. 8 the particulars of joint charge holder/s should be given by way of attachment in Form 8

9.       The charge holder’s detail has to be given. The charge holders name can be selected from the prescribed list. If the name of the charge holder is not given in the prescribed list ‘others’ can be selected.

10.   If ‘others’ is selected enter CIN no if the charge holder is an Indian Company and click prefill button. The name, register offices address and email id of the charge holder will be prefilled by the system. If the charge holder is not an Indian Company the name, address and the email id of the charge holder can be typed and the CIN no is not mandatory.

11.   The charge creation is based on the instruments. The nature of instrument like loan agreement, deed of hypothecation, deed of equitable mortgage, promissory note are to be mentioned

12.   Date of instrument creation or modification of charge has to be mentioned

13.   The details of amount secured have to be given in figures. It will be automatically prefilled in words. In case the amount secured is in foreign currency enter the rupee equivalent and the details of the foreign currency.

14.   The rate of interest, terms of repayment, margin, extent and operation of charge has to be mentioned.

15.   In case of acquisition of property is subject to charge, the date of acquisition, amount of charge, nature of agreement and particulars of property charged are to be given.

16.    Short particulars of assets or property charged including complete address and the location of the property.

17.   Whether any of the property or interest therein under reference is not registered in the name of the company. If yes is selected, in whose name it is registered to be mentioned.

18.   Date of last modification prior to present modification to be mentioned

19.   Particulars of present modification to be mentioned. Whatever particulars are given the same will be reflected in the certificate of the charge given by the registrar of companies (ROC).

20.   Attachments to form 8 are

a. Instruments of creation or modification of charge,

b. Particulars of all joint charge holders or Consortium holders,

c. Optional attachments if any

SATISFACTION OF CHARGE:

In accordance with section 138 of Companies Act 1956, the company shall file particulars regarding satisfaction of charge in Form 17. For this purpose a letter has to be obtained from the bank stating that the loan is satisfied and the letter will be attached as evidence of satisfaction.

UPLOADING OF FORM 8 AND FORM 17:

1. Form 8 or Form 17 has to be digitally signed by the director of the Company, by the charge holder and the practicing professional like, Practicing Company Secretary or Practicing Chartered Accountant or Practicing Cost Accountant.

2. The form 8 or Form 17 filing is under Straight through Process method. Therefore one has to be very careful before uploading the form as Form 8 filed once cannot be rectified easily and it may require another form 8 for modification.

3. Once the form is approved the registration of charge certificate will be generated and available and the approval email will go to the charge holder’s, Company’s and practicing profession’s email id.

4. The roll check for the banker’s digital signature is also mandatory. Some times while uploading the remarks will come that the banker’s digital signature is revoked. In that case it is to be ensure that the banker’s digital signature is roll checked or the uploading may be tried after some time as at times the website may not be working.

OTHER POINTS RELATING TO CHARGES:

1. In case of pledge Form 8 is not required to be filed. Fore example Car loan from bank. However, if the company is availing car loan from a bank, the bank may be interested to file Form 8 in view of the loan amount. This can be done at the instance of the company or of any interested person by filing Form 8 with prescribed fees.

2. In case of any security is given by the public limited company to a private limited company in which a director of a public limited company is a director or a member in a private limited company sec. 295 of the companies act is attracted. Hence, care should be taken not to give security by a limited company to a private limited company.

3. Whenever loan is granted and agreements are entered the bank or lender is interested to file Form 8 even without the company’s knowledge also the bank may file form 8 after taking the digital signature of the director. In case of satisfaction of loan the bank is least bothered to file Form 17 and it is only the company’s duty to follow up and file Form 17.

4. In many cases there are number of redundant charges are appearing on the index of charges of the company. The company is required to obtain satisfaction letter from the bank and file Form 17 and remove the unnecessary charges from the MCA website.

5. A company wants to exist under Section 560 of the Companies Act, has to ensure that no charge is pending in the index of charges of MCA website.

6. The form 8 and Form 17 has to be signed by the Director, Company Secretary or Managing Director or the Manager of the Company or authorised representative in case of foreign company.

7. In case any charge is created or modified in favour of chargeholder by issue of debentures then Form 10 has to be filed with Registrar of Companies (ROC) in accordance with Section 125(4)(a) of the Companies Act 1956. In case repayment of loan and satisfaction of charges Form 17 has to be filed with ROC.

8. In case of paripasu charge, Form 8 has to be filed in respect of all the chargeholders. 

9. In case of the Charge is created outside India, comprising solely property situated outside India, Form 8 shall be filed within 30 days from the date of receipt of the instrument creating or evidencing the charge by post.

10. When the charge is created in India, but comprises property situated outside India, the instrument creating the charge verified in the prescribed manner has to be filed with ROC.

11. The bank or chargeholder normally requires search report to find out what are the charges the company has created. The search report has to be prepared based on Charge ID and forms relating to charge filed which is available in MCA website. The registered charge certificates are also available in the MCA website. But, in certain circumstances the Charge ID in MCA website may not contain all the charges. Hence, wherever the search report is relating to charges prior to the year 2006 then it is advisable to make physical inspection of documents at ROC and give the search report.

LATE FILING OF FORM 8, FORM 10 AND FORM 17 AND CONDONATION OF DELAY:

1. If there is a delay in filing Form 8 or Form 10 and Form 17 even if it is one day or one year a petition for Condonation of delay has to be filed with concerned Regional Director, Ministry of Corporate affairs. The due dates for filing the above forms are as follows:

a. Form 8 for creation or modification of charge - within 30 days from the date of creation or modification of charge. Another 30 days is given as a grace period for the filing of Form 8 with additional fees.

b. Form 10 for creation or modification of charge of issue of debentures - within 30 days from the date of creation or modification of charge. Another 30 days is given as a grace period for the filing of Form 10 with additional fees.

c. Form 17 for satisfaction of charge – within 30 days from the date of satisfaction of loan.

2. In case of delayed filing beyond the due date, 60 days from the date of creation of charge or 30 days from the date of satisfaction of charge the forms can be filed with one time payment of fees. However, a remark will appear in the challan that a delay of filing is of so many days and condonation of delay is required. 

 3. For condonation of delay petition has to be prepared containing the reasons for the delay and Form 61 has to be filed with ROC prescribed filing fees (Rs. 1000)

4. Form 24AAA has to be filed with Regional Director (RD) containing the petition and affidavits with the filing fees (Rs. 1000)

5. After the petitions are filed with RD the order will be issued condoning the delay and in the order the amount of fees to be paid will also be mentioned (as may be decided by RD)

6. The order issued by RD has to be filed with ROC in Form 21 with prescribed filing fees.

7. Once the form 21 is filed the ROC will approve Form 8 or Form 10 or Form 17.

To conclude delay in filing of particulars of charges will attract cumbersome procedure for filing petition which will further delay the process; it is advisable to file the ROC forms in time.