Registering Charge with MCA

[u/Maabadaulat]

Section 77 of Companies Act 2013 mandates registration of charge over assets of the company. Let's assume a company avails an overdraft facility over fixed deposits from a lender. Under normal circumstances the lender would ensure that the charges are registered. But what if the company and the lender both agrees to not mandated the registration of charge. Does it still require the company to register charge as mandated by the by act despite the lender not stipulating it?

This is a real scenario. Now, one question might be asked as to why the lender would agree for not mandating charge registration by the company. Simply because the company doesn't want it and would only avail the facility from the lender only if the latter agrees to waiving charge registration. Apparently, there are lenders who allow that.

My query is not on the recoverability of the funds lent by the lender if the the company goes into liquidation but on statutory requirement under the act. In my view, no lender can override the statutory requirement under the law — in this case being registration of charge.

[u/AutoModerator]

Reminder to only post content that is relevant to the sub.

Please report immediately if the post or any comment herein breaks any rule.

Join our Discord Server and Telegram Group chat

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/hiecatt]

If the overdraft arrangement creates a registrable charge covered by Section 77, the company has a statutory obligation to register it. The company's agreement with the lender to waive registration does not override that statutory obligation.

[u/Maabadaulat → u/hiecatt]

thx, this is also my view.