Procedure – Modification of Charge

 

1)    In case term or condition or the extent or operation of any charge registered by the company under {Section 125 }  is modified, then, particulars of such modification should be filed with the concerned ROC.

2)    File terms of the modification(s) with the concerned ROC in { E form no . 8 } within a period of 30 days with the following attachments.

Ø  Particulars of the present modification.

Ø  Other optional attachments (Resolution }

Ø  Copy of the agreement or other instrument modifying the existing charges.

3)    File terms of the modification(s) with the concerned ROC in {E form No 10 } within a period of 30 days, if such modification pertains to change in the terms in connection with issue of debentures.

Ø  Particulars of the present modification.

Ø  Copy of the agreement or other instrument modifying the existing charges.

4)    In the said E-forms, the following should be mentioned, before being filed electronically :

Ø  Charge identification number of the charge to be modified.

Ø  Brief description of the instrument modifying the charge

Ø  Date of instrument modifying the charge.

Ø  In case of modification of charge outside India, date of receipt of instrument modifying        

                                  

5)    Ensure that the e-form is digitally signed by the authorised signatory of the banker along with the authorised signatory of the company (Managing Director or director or secretary) and certified by PCS or PCA.

6)    Make the payment of requisite fees prescribed by the Companies { Schedule X of Companies Act }

 NOTE

Any change or variation in any respect of any of the following four aspects pertaining to a charge already created will amount to modification of a charge:

•	Terms subject to which a charge was created;
•	Conditions on which a charge was created;
•	Extent (scope) of the charge;
•	Operation (the state of being operative) of the charge.

Thus, any change, variation, alteration, addition, deletion, etc., affecting the terms, conditions, extent or operation affecting the charge already created, would amount to modification of a charge. Some of the instances, which would amount to modification of a charge, are as follows:

(a)	Increase in the amount of loan or a credit facility.
(b)	Further charge for the same amount of loan or credit facility by way of additional security on different property.
(c)	Inclusion of additional asset(s) in the property already charged, with or without any additional loan.
(d)	Release of particular asset from the operation of the charge by reason either of part repayment of loan or otherwise.
(e)	Inclusion of different type of loan or credit facility within the overall limit or with additional limit.
(f)	Addition of another creditor as a charge-holder with or without any additional loan.
(g)	Additional amount of a loan or credit facility charging the property to be acquired in future.
(h)	Change in the distribution or allocation of different kinds of credit facilities with/without any change in the overall credit limit.
(i)	Change in the chargeable rate of interest (other than bank rate).
(j)	Change in the terms relating to the maintenance of margin or in the period of repayment of a loan or any other change in repayment terms.
(k)	Change in the nature of security in respect of a charge already created.
(l)	Revision of the list of assets forming part of the instrument creating a charge.
(m)	Creation of a second charge in favour of a new creditor on the property already charged to another creditor.
(n)	Release and re-deposit of title deeds of property with intent to secure and include in the charge an additional loan or credit facility or an addition of a creditor.
(o)	In the case of consortium of bankers or financial institutions, where there is a single instrument creating a charge, change in the amount of loan or credit facility limit of any one or more members of the consortium, i.e. a share of only one or some of them is changed.
(p)	New charge created to rank pari passu with an earlier charge.
(q)	Inclusion of the same kind of property situated at a different place.
(r)	In the case of a consortium, where there is a single instrument, any change in the terms and conditions affecting any one or more of the members of the consortium.
(s)	In the case of a pari passu charge or charges ranking first and second, a memorandum of confirmation by one creditor of inter se arrangement between the creditors holding the charge ranking pari passu or first and second.
(t)	Release of title deeds with the instrument of re-depositing them with another creditor holding pari passu charge, without any other change.
(u)	Assignment of a charge.
(v)	Deposit of additional title deeds in respect of the same property.
(w)	Change in any respect relating to the charge as a result of change in law.