CHG-1 Charge Registration Under Section 77: 30-Day Deadline, ₹5 Lakh Penalty & the Void-Charge Trap (2026 Guide)

CHG-1 Charge Registration Under Section 77: 30-Day Deadline, ₹5 Lakh Penalty & the Void-Charge Trap (2026 Guide)

Last updated: 7 July 2026 • By CS Sapna Malpani, Practising Company Secretary, Bangalore

In October 2025, the Registrar of Companies at Cuttack passed an order against Magnum Sea Foods Limited and four of its directors for one failure: the company did not file Form CHG-1 to register a charge under Section 77 of the Companies Act, 2013. The takeaway is blunt: charge registration is not paperwork a company can park for later. Miss the 30-day window and two things happen at once. The company and its officers face a penalty of up to ₹5 lakh, and the charge itself can turn worthless against creditors if the company ever goes into liquidation. This guide covers the CHG-1 charge registration deadline, the penalty stack under Section 86, the void-charge trap, and how to file cleanly the first time.

What a charge is, and why Section 77 exists

A charge is a security interest a company creates over its assets to secure a loan or other obligation. When a private company takes a term loan and hypothecates its plant and machinery, that is a charge. When a startup raises venture debt and the fund takes security over receivables or intellectual property, that is a charge. When a company mortgages its factory land to a bank, that is a charge. Section 77 of the Companies Act, 2013 places a clear duty on the company to register the particulars of every such charge with the Registrar of Companies.

The point of registration is public notice. The Registrar maintains a register of charges that anyone can inspect, so a future lender, buyer, or investor knows exactly which of the company’s assets are already pledged and to whom. This is why charge registration sits at the centre of due diligence for a bank loan, a funding round, or an acquisition. A company with a messy or incomplete charge register looks like a company that does not know what it owes.

Section 77 covers a charge on any property or asset, whether tangible or intangible, and whether situated in India or outside India. The form used is Form CHG-1 for most charges, and Form CHG-9 where the charge relates to debentures. The form is signed by both the company and the charge-holder and filed with the instrument that creates the charge.

The 30-day rule, and the two extension windows

The core deadline is short. A company must register the charge within 30 days of its creation. The date of creation is the date the charge instrument is executed, such as the date of the loan agreement or the hypothecation deed. A common and costly mistake is to count from the date the money hits the account. The clock runs from the document, not the disbursal.

The Companies (Amendment) Ordinance, 2019 tightened what happens if you miss the 30 days. For charges created on or after that amendment, the extension windows work like this:

Read that last line again. The 120-day outer limit is a hard stop for new charges. There is no routine route to register a charge that is more than 120 days old under this section. A company that discovers an old, unregistered charge is left with a lender holding paper security that the law will not recognise against other creditors. That is a governance failure that surfaces at the worst possible moment, usually during a diligence exercise or a stressed-asset situation.

The void-charge trap: the part most directors miss

The penalty under Section 86 is the visible cost. The bigger risk sits in Section 77(3). It says that a charge which is not registered, and for which the Registrar has not issued a certificate, shall not be taken into account by the liquidator or any other creditor.

In plain terms, an unregistered charge is void against the liquidator and creditors. If the company later goes into insolvency or winding up, the lender who thought it held security over the company’s machinery or receivables is treated as an unsecured creditor. It drops to the back of the queue, behind every creditor who did register. Section 77(4) confirms that the money borrowed still has to be repaid, so the company does not escape the debt. What is lost is the security, and with it the lender’s priority in recovery.

This is why the failure to file CHG-1 is not the company’s problem alone. It is the lender’s problem too, which is exactly why loan agreements make charge registration a condition precedent to disbursal, and why lenders keep the backstop under Section 78, described below. According to CS Sapna Malpani, the sharpest way to explain charge registration to a founder or a director is this: an unregistered charge is a loan with no lock on the door. The debt is real, the collateral is named on paper, but in a recovery the paper does not hold.

The penalty stack under Section 86

Section 86 sets the penalty for default in complying with the charge-registration provisions. After the decriminalisation reforms, the earlier fine-and-imprisonment structure was replaced with a flat civil penalty that the Registrar adjudicates.

The ₹5 lakh figure is not theoretical. In August 2024, the Registrar of Companies, Tamil Nadu, adjudicated a Section 77 default for failure to file CHG-1 and applied the ₹5 lakh company penalty and ₹50,000 per officer, before halving the amounts because the company qualified as a small company. The point stands: the Registrar reads the charge register, spots the gap, and issues the order. Charge defaults are among the easier violations for the Registrar to detect, because a bank’s own filings and the company’s balance sheet both point to secured borrowing that has no matching charge on record.

How to file CHG-1 the right way, step by step

Charge registration is straightforward when it is treated as part of the loan closing rather than an afterthought. Here is the sequence a well-run company follows.

Step 1: Fix the date of creation. Identify the exact date the charge instrument was executed. For a bank facility this is usually the date of the loan or hypothecation agreement. Diarise the 30-day deadline from that date on the same day the document is signed.

Step 2: Pass the board resolution. Approve the borrowing and the creation of the charge at a board meeting under Section 179(3). Where the total borrowing will exceed the company’s paid-up capital, free reserves, and securities premium, add a special resolution under Section 180(1)(c) from the members. If the resolution is one that requires filing, record it for the related annual and event-based filings your company already tracks.

Step 3: Collect signatures. Form CHG-1 must be signed by both the company and the charge-holder. Attach the instrument that creates the charge, such as the loan agreement, deed of hypothecation, or mortgage deed. A missing or unsigned instrument is a frequent reason filings get sent back.

Step 4: File within 30 days. File Form CHG-1 on the MCA V3 portal within 30 days of creation, on the normal fee. Use Form CHG-9 instead if the charge relates to debentures. Pay attention to the particulars: the amount secured, the description of the property charged, the rate of interest, and the terms of the charge all have to match the instrument.

Step 5: Collect the certificate. The Registrar issues a certificate of registration in Form CHG-2. Save it in the company’s charge file. This certificate is the document that makes the charge count against the liquidator and other creditors, so it is worth more than a filing acknowledgement.

If you have already slipped past 30 days, do not wait for a reminder. Apply within the 60-day window on additional fees, and if that has passed, within the 120-day window on ad valorem fees. Every day of delay raises the fee and narrows the door.

CHG-1, CHG-9 and CHG-4: which form does what

The charge forms are easy to confuse, which is how companies end up filing the wrong one and starting the clock again. This is how they map.

Two more forms round out the set. The Registrar issues CHG-2 as the certificate of registration and CHG-5 as the memorandum of satisfaction. If you need the Central Government to condone a delay beyond the ordinary windows, the application goes in CHG-8. A well-maintained charge file has the CHG-1, the CHG-2 certificate, and eventually the CHG-4 and CHG-5, for every facility the company has ever taken.

Satisfaction of charge: the filing companies forget

Registering the charge is the half everyone remembers. Reporting its satisfaction is the half that gets missed, and it causes real problems later. When a loan is fully repaid and the lender releases its security, the company must intimate the Registrar in Form CHG-4 within 30 days of the satisfaction under Section 82. The Registrar can condone a delay up to 300 days on application. Once accepted, the Registrar records a memorandum of satisfaction and issues Form CHG-5.

Skip CHG-4 and the charge stays open on the public register even though the loan is gone. Years later, when the company is raising a round or negotiating a sale, a diligence lawyer pulls the charge index and finds a live charge in favour of a bank that was paid off long ago. Now the company is chasing a no-objection letter from a branch that has changed hands twice, while the deal timeline slips. Filing CHG-4 on time is the cheapest insurance against that scenario. For startups building a fundraise-ready compliance file, a clean charge register is as important as clean cap-table and FEMA records.

When the lender registers the charge instead: Section 78

Section 78 gives the lender a backstop. If the company does not register the charge within 30 days, the charge-holder can apply to the Registrar to register it. The Registrar gives the company 14 days to show cause. If the company neither registers the charge nor objects with reason, the charge-holder completes the registration and recovers the fees and costs from the company.

Lenders keep this route in reserve, and they do use it. But a company that pushes its bank or its venture debt fund to invoke Section 78 has told that lender something unflattering about its internal controls, right before it may need to draw down more or ask for a waiver. The better path is to never make the lender chase it.

Why this matters more for startups than they expect

Charge registration is often filed under bank compliance for older private companies, which leaves founders assuming it does not touch them. Venture debt changes that. When a fund or an NBFC lends to a startup, it takes security, and that security is a charge that has to be registered in CHG-1 within 30 days. The same is true of a working-capital line, a lease-backed facility, or a charge over receivables from a marquee customer.

The exposure is twofold. First, the Section 86 penalty falls on the directors as officers in default, which is a personal liability the founders carry. Second, an unregistered charge is a red flag in the next equity round. Investors’ counsel will map every charge on the register against the company’s stated debt, and a mismatch invites questions about what else the company has failed to track. Directors already managing their own annual filings should treat charge registration as part of the same discipline. Clean charge records are not a nicety. They are part of being fundraise-ready.

How charge registration sits alongside your other board approvals

A charge rarely stands alone. It usually rides on a borrowing decision that carries its own compliance. The board resolution to borrow and create the charge is a Section 179(3) matter. Borrowing beyond the paid-up capital, free reserves, and securities premium needs a Section 180(1)(c) special resolution. Where the lender is a related party, the transaction may also touch the related-party approval framework under Section 188. Treating the charge filing as one step in a linked sequence, rather than an isolated form, is what keeps the whole borrowing clean.

Sources and references

• Section 77, Companies Act, 2013 (duty to register charges), bare text, IBC Laws
• Companies Act, 2013 (Sections 77, 78, 82, 86), India Code, Government of India
• Section 86, punishment for contravention, Companies Act Integrated Ready Reckoner
• Companies (Registration of Charges) Rules, 2014 and Forms CHG-1, CHG-4, CHG-8, CHG-9, Ministry of Corporate Affairs
• Impact of the Companies (Amendment) Ordinance, 2018 on registration of charges, Cyril Amarchand Mangaldas
• RoC adjudication order, failure to register charge in Form CHG-1, TaxGuru
• ROC adjudication orders (official), MCA data and reports

Frequently asked questions

What is the due date for CHG-1 charge registration under Section 77?

Form CHG-1 must be filed within 30 days of the date the charge is created. If you miss it, the Registrar can allow registration within 60 days of creation on additional fees, and within a further 60 days (120 days from creation in total) on ad valorem fees. After 120 days the charge can no longer be registered under Section 77. The clock starts from the date the charge instrument is executed, not the date the loan is disbursed, so diarise the deadline the moment the agreement is signed.

What happens if a charge is not registered with the Registrar of Companies?

Under Section 77(3), an unregistered charge is not taken into account by the liquidator or any other creditor. The lender is treated as an unsecured creditor and loses priority over the charged asset if the company goes into winding up or insolvency. The debt itself stays payable under Section 77(4), but the security is worthless in a recovery. This is the single biggest reason charge registration matters more than the penalty on its own, and why lenders make CHG-1 a condition of disbursal.

What is the penalty for not filing CHG-1 under Section 86?

Section 86(1) imposes a penalty of ₹5,00,000 on the company and ₹50,000 on every officer in default. For a small company, one person company, startup, or producer company, Section 446B halves these amounts, subject to a ceiling of ₹2 lakh for the company and ₹1 lakh for the officer. Wilfully false information in a charge filing is treated as fraud under Section 447. The Registrar adjudicates these penalties, and charge defaults are among the easier violations to detect from a company’s own balance sheet.

What is the difference between Form CHG-1 and Form CHG-9?

Form CHG-1 registers or modifies a charge on any property or asset of the company, such as a bank term loan, working-capital limit, hypothecation of stock, or mortgage of immovable property. Form CHG-9 registers or modifies a charge that relates to debentures. Both are filed within the same 30-day window under Section 77, so the difference is the nature of the charge, not the deadline.

What is Form CHG-4 and when is it filed?

Form CHG-4 reports the satisfaction of a charge once the loan is fully repaid and the security released. Under Section 82, the company must intimate the Registrar in CHG-4 within 30 days of the payment or satisfaction, with condonation available up to 300 days on application. The Registrar then records a memorandum of satisfaction and issues Form CHG-5. Filing CHG-4 on time keeps the charge register clean, which saves a scramble for lender no-objection letters during a later loan, funding round, or sale.

Does CHG-1 apply to startups that raise venture debt?

Yes. Venture debt lenders take a charge over a startup’s assets, receivables, or intellectual property, and that charge must be registered in Form CHG-1 within 30 days. Missing it exposes the founders and directors to the Section 86 penalty as officers in default and leaves an unregistered charge that investors flag during due diligence for the next equity round. A clean charge register belongs in the same fundraise-ready file as the cap table and the FEMA filings.

About the author. CS Sapna Malpani is a qualified Company Secretary (ICSI) and Partner at Vivek Hegde & Co, Company Secretaries, Bangalore. She advises private companies, startups, and listed entities on MCA filings, charge and secured-borrowing compliance, FEMA, and governance. This guide is general information, not legal advice; confirm the current forms, fees, and thresholds on the MCA V3 portal or with a professional before you act.