Charge Creation and Satisfaction (CHG-1 and CHG-4)

Overview

When a company borrows from a bank or financial institution, the lender usually takes security over the company's assets. That security is called a charge. The Companies Act, 2013 requires the charge to be registered with the Registrar of Companies (ROC), and requires the company to report when the loan is fully repaid and the charge is released. Registration protects both sides: the lender's priority is recorded on the public register, and the company's open charges show an accurate picture to the next lender.

Who needs it

• A company taking a term loan, working capital facility or overdraft secured on its assets.
• A company issuing secured debentures.
• A company whose existing charge has been modified, for example the amount or the assets covered.
• A company that has repaid a loan fully and wants the charge shown as satisfied.
• A company or lender that missed the original registration window.

What Zenith does

We listen first to the facility and the security, then share a checklist for your case. Your relationship manager prepares the board resolution and, where borrowing needs members' approval, the special resolution and MGT-14, then the charge form with the instrument of charge attached. For a repaid loan we prepare the satisfaction form and coordinate the lender's digital signature. Filings are made through appropriately authorised professionals. Timelines depend on completeness, complexity and authority processing, including the lender's cooperation.

Eligibility and key rules

• A charge can be fixed (specific assets) or floating (changing pool of assets), over tangible or intangible property, in India or abroad.
• A charge needs two parties, an intention to secure a loan and identified assets.
• Registration is due within 30 days of creation or modification. If missed, an application for extension is possible with additional fees in a limited window (the source read describes up to 60 days after the due date, and a further 60 days for charges created after the 2019 amendment).
• The company or the lender can apply; the lender often does if the company does not.
• Form CHG-1 is used for charges other than debentures; CHG-9 for debentures; the ROC issues the registration certificate in CHG-2.
• Satisfaction of charge is intimated within 30 days of full repayment in Form CHG-4, digitally signed by the company and the charge holder. Part repayment is a modification (CHG-1), not a satisfaction.
• An unregistered charge can leave the lender ranked as unsecured in liquidation and behind later registered charges.

Documents required

• Sanction letter and loan agreement.
• Instrument creating or modifying the charge (hypothecation deed, mortgage deed, debenture trust deed).
• Board resolution; special resolution and MGT-14 where borrowing powers need it.
• Details of the lender, amount secured, assets charged and terms.
• Particulars of joint charge holders in a consortium.
• For satisfaction: lender's no-dues or release letter and the date of complete repayment.
• DSC of an authorised director and, for CHG-4, the lender's authorised signatory.

Process and timeline

1. Board meeting approves the borrowing, the security and the signatory; members approve where required.
2. Execute loan and security documents.
3. File CHG-1 (or CHG-9) within 30 days with the instrument attached.
4. ROC issues the certificate (CHG-2). Update the register of charges.
5. On full repayment, obtain the lender's release document.
6. File CHG-4 within 30 days of satisfaction; late filing is possible up to 300 days with additional fees.
7. Beyond 300 days, a condonation or compounding route is needed, which takes longer.

Timelines depend on completeness, complexity and authority processing.

Government fees, penalties and due dates

• CHG-1 and CHG-9 are due within 30 days of creation or modification.
• CHG-4 is due within 30 days of satisfaction; the fee in the source read ranges from about ₹200 to ₹600 by capital, with additional fees as multiples of the normal fee for delay.
• Section 86 prescribes punishment for contraventions of the charge provisions: a fine on the company of ₹1,00,000 to ₹10,00,000 and, for officers in default, imprisonment up to six months or a fine of ₹25,000 to ₹1,00,000 or both, per the public source read.

Amounts and dates above reflect public sources read in October 2026 and change with notifications, so Zenith confirms the current figures in your quotation.

Common mistakes

• Waiting for the bank to file and discovering the 30 days have passed.
• Recording the wrong amount secured or an incomplete asset description.
• Forgetting the special resolution for borrowings above the limits in the Act.
• Never filing CHG-4, so a repaid loan still shows on public records and blocks later borrowing.
• Treating part repayment as satisfaction.
• Not updating the company's own register of charges.

FAQs