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The Ministry of Corporate Affairs (MCA) disclosed its notification, General Circular No. 23/2020, on 17.06.2020 provided for a scheme known as “Scheme for relaxation of time for filing forms in relation to creation or modification of charges under the Companies Act, 2013″.
It relaxes the time for the filing of forms related to the creation or modification of charges under the Companies Act, 2013 due to the stressing times caused by the Covid-19 pandemic.
Prior to this notification companies are required to file forms related to creation or modification of charges within the timelines provided under Section 77 of the Companies Act, 2013 (Act), that is a total of 120 days of the creation or modification of charges. A charge is created when a company puts forward its assets as security on any amounts loaned to it. Further modification of charge is when the terms of the charge are changed.
As of 30.03.2020, the MCA introduced the Companies Fresh Start Scheme (CFSS).
CFSS provided relaxations to companies who were in default to file their documents or forms between 01.04.2020 and 30.09.2020 without the need to pay additional fees. It should be noted that under CFSS relaxations were not extended to the charge related to documents. To provide similar relaxations, the MCA vide General Circular No. 23/2020, has extended the waiver of additional fees for the late filing of charges related to documents too.
1. The scheme comes into effect from June 17th 2020.
2. Applicability: It is applicable in respect of filing of Form No.CHG-1 and Form No.CHG-9 (collectively referred to as forms).
– Form No.CHG-1: This is an e-form used by companies to file the creation or modification of any charge to the concerned RoC. in the case of a foreign company this form needs to be filed with the RoC of Delhi
– Form No.CHG-9: this e-form is used by companies to file the creation or modification of charge for debentures to the concerned RoC.
3. It applies to the following alternative cases:
– The date of creation or modification of charge is before 01.03.2020 but the timeline for filing , i.e. 120 days has not expired as on 01.03.2020. Therefore, it is not applicable to cases whose creation or modification of charges was before 03.11.2019.
The date of creation or modification of charges falls on or in between 01.03.2020 and 30.09.2020.
The table below will enumerate the terms of relaxations that are provided under the scheme. The key part of the scheme is the relaxation period that has been given from 01.03.2020 to 30.09.2020.
|Dates||Period of exclusion||Fees applicable|
|In the case where the date of creation or modification of charge is before 01.03.2020||The period starting from 01.03.2020 to the date of 30.09.2020 will not be included for the purpose of calculating the 120 days.
For example: If the creation or modification of charge took place on 01.02.2020, then, for the purpose of calculation of 120 days, the count will start from 01.02.2020 to 29.02.2020, and will only resume from 01.10.2020 onwards. The period from 01.03.2020 to 30.09.2020 will be excluded during the calculation. Therefore in this scenario, you will have time till 30.12.2020 for the purpose of filing the form.
|In the case where the date of creation or modification of charge is during the exclusion period, i.e. from 01.03.2020 to 30.09.2020.||The period starting from the date of creation or modification of charge to the date of 30.09.2020 will not be taken into account for the calculation of the 120 days.
For example: If the creation or modification of charge is on 02.03.2020, then, for the purpose of calculating the 120 days the period from 02.03.2020 to 31.09.2020 will not be taken into account. Therefore the start of the 120 days will only begin from 01.10.2020. In this case, you will have time till 01.28.2021. for the purpose of filing the forms.
The scheme shall not be applicable in the following circumstances:-
– Forms CHG-1 and CHG-9 have already been filed before 17.06.2020.
– Where the last date for filing has already expired as under Section 77 and 78 of the Act before the date of 01.03.2020.
– Suppose the 120 days expire on any date after 30.09.2020 after considering the exclusion period, then this scheme will not be applicable.
– Filing of Form CHG-4 for the satisfaction of charges. This means that the relaxations provided in this scheme do not extend to the filing of Form CHG-4.
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