When a company repays a secured loan in full, the charge it created on its assets in favour of the lender has to be removed from the Registrar’s records. Until that is done, the MCA records continue to show the assets as encumbered, which can hold up fresh borrowing, sale of assets and due diligence.

This article walks through the procedure for reporting satisfaction of a charge, from obtaining the lender’s no-objection to filing e-Form CHG-4, with the timeline for each step.

Step-by-Step Procedure

Step 1: Repayment and No-Objection Certificate from Charge-holder – on the date of repayment
(Applicable to All Companies)
Section 82(1) of the Companies Act, 2013 read with Rule 8(1)

• On repayment or satisfaction of the charge in full, the company is required to obtain a no-objection certificate, letter of satisfaction or similar confirmation from the charge-holder.
• The date of repayment or satisfaction starts the 30-day period for intimation.

Step 2: Board Authorisation – early enough to file within 30 days
(Applicable to All Companies)
Sections 173 and 179 of the Companies Act, 2013 read with SS-1

As good practice, the Board takes note of the satisfaction and authorises a director or the Company Secretary to sign and file CHG-4. A resolution by circulation may be used if a meeting cannot be held in time. Listed companies disclose the outcome to the stock exchanges where it is material.

Step 3: Filing of e-Form CHG-4 – within 30 days of payment or satisfaction
(Applicable to All Companies)
Section 82(1) of the Companies Act, 2013 read with Rule 8 of the Companies (Registration of Charges) Rules, 2014

• The company is required to intimate the Registrar in e-Form CHG-4, signed by the company and the charge-holder, attaching the no-objection certificate.
• Where it is not filed within 30 days, the Registrar may, on application by the company or the charge-holder, allow intimation within 300 days of the payment or satisfaction, on payment of additional fee.

Step 4: Registrar’s Notice and Memorandum of Satisfaction – on receipt of CHG-4
(Applicable to All Companies)
Sections 82(2) to 82(4) and 83 of the Companies Act, 2013

• The Registrar issues a notice to the charge-holder to show cause why the satisfaction should not be recorded, unless CHG-4 has been signed by the charge-holder.
• On being satisfied, the Registrar records a memorandum of satisfaction in the register of charges and issues a certificate of satisfaction in Form CHG-5.
• The Registrar may also record satisfaction on evidence received, even without intimation from the company (Section 83).

Step 5: Update of Register of Charges – on satisfaction
(Applicable to All Companies)
Section 85 of the Companies Act, 2013 read with Rule 10

The company’s register of charges in Form CHG-7 is required to be updated to record the satisfaction. Instruments of the charge are required to be preserved for 8 years from the date of satisfaction.

Step 6: Disclosures where Listed Debt is Secured – promptly
(Applicable in case of Company having listed non-convertible securities)
Regulations 51 and 56 of the SEBI (LODR) Regulations, 2015

Where the charge secured listed non-convertible securities, the satisfaction or release is required to be disclosed to the stock exchanges and intimated to the debenture trustee.

Step 7: Condonation of Delay beyond 300 Days – only where the 300-day period has expired
(Applicable to All Companies)
Section 87(1) of the Companies Act, 2013

Where satisfaction has not been intimated within 300 days, the company may apply to the Central Government (through the Regional Director) to extend the time, on showing that the omission was accidental or due to sufficient cause and does not prejudice creditors or shareholders. The order is filed with the Registrar in e-Form INC-28.

Penalties for Non-Compliance

Satisfaction of Charge at a Glance

Day 0 = Date of payment or satisfaction of the charge in full