A company has created a parri passu charge on its assets by way of Security Trustee Agreement between Company, Trustee and Secured lenders. There is a limit defined in the STA agreement upto which a Company can create a charge. It is the first charge on Company 's receivables that is registered with ROC as per the provisions of Sec 125 of the Companies Act 1956.
Now if the Company wants to create a second charge on its receivables in favour of the lenders and it will be registered with Security Trustee by way of an Accession Agreement, whether this charge has to be registered with ROC again and if not what are the implications for the same?
17 December 2007
SEC.125 OF COMPANY'S ACT SAYS ONE OF THE CHARGES TO WHICH THIS SEC. APPLIES IS BOOK DEBTS OF THE COMPANY. IF THE CHARGE IS NOT REGISTERED WITH ROC ,THE CHARGE BECOMES VOID,THE EFFECT OF WHICH IS ,THE MONIES SECURED THEREBY SHALL BECOME PAYABLE IMMEDIATELY .BUT THE CHARGE BECOMING VOID WILL NOT PREJUDICE ANY CONTRACT OR OBLIGATION FOR THE REPAYMENT OF THE MONEY SECURED BY THE CHARGE. SO IN YOUR CASE THE SECOND CHARGE ON RECEIVABLES HAS TO BE REGISTERED WITH ROC. FOR THIS PURPOSE THE FIRST CHARGE HOLDERS NEED TO GIVE NOC FOR CREATING A SECOND CHARGE. THEN ONLY YOU CAN CREATE A SECOND CHARGE BY EXECUTING DEED OF HYPOTHECATION AND PREPARE FORM NO 8 AND FILE THE SAME WITH ROC.THE IMPLICATIONS OF NOT REGISTERING CREATION OF A CHARGE WITH THE ROC ( FIRST CHARGE/PARIPASSU CHARGE/ SECOND CHARGE) ON ASSETS OF A COMPANY ARE AS STATED ABOVE. R.V.RAO
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