CHG-1 and CHG-4: Creation and Satisfaction of Charge on Company Assets

A company may repay a bank loan in full, but its compliance is not necessarily complete until the corresponding charge is formally satisfied with the Registrar of Companies.

When a company borrows money against its assets, the lender may create a security interest or charge over those assets. The Companies Act, 2013 requires applicable charges to be registered with the Registrar of Companies, and later requires the company to report their satisfaction when the underlying debt or obligation has been fully paid.

Two important MCA forms are involved in this process:

CHG-1 — generally used for registration of creation or modification of a charge, other than charges related to debentures.

CHG-4 — used to intimate the Registrar about payment or satisfaction in full of a registered charge.

The MCA's current CHG-1 Instruction Kit states that the form is used for creation or modification of charges other than those related to debentures, while the CHG-4 Instruction Kit states that the form is used for reporting satisfaction of a registered charge.

For companies in Delhi, Noida, Gurugram, Ghaziabad, Faridabad and other business centres, understanding the difference between these two forms is important because a loan transaction can create multiple ROC compliance requirements.

What Is a Charge on Company Assets?

Under Section 2(16) of the Companies Act, 2013, a charge means an interest or lien created on the property or assets of a company or any of its undertakings, or both, as security, and includes a mortgage.

In simple terms, a charge gives a lender or charge-holder a security interest over specified company assets.

For example, a company may borrow:

₹1 crore from a bank

and provide:

• Factory premises as security

• Machinery as security

• Land as security

• Receivables as security

• Other eligible assets as security

The security created over those assets may constitute a charge requiring registration with the ROC.

What Is CHG-1?

CHG-1 is the form used for registration of creation or modification of a charge, other than charges related to debentures.

The MCA Instruction Kit links CHG-1 with:

• Section 77

• Section 78

• Section 79

• Section 384 read with Sections 77, 78 and 79

• Rule 3(1)

• Rule 13 of the Companies (Registration of Charges) Rules, 2014.

Therefore, when a company creates a qualifying charge over its assets, the company needs to examine the CHG-1 filing requirement.

What Is CHG-4?

CHG-4 serves a completely different purpose.

It is used when a registered charge has been paid or satisfied in full.

The MCA's CHG-4 Instruction Kit states that under Section 82(1), a company must give intimation to the Registrar of the payment or satisfaction in full of a registered charge within 30 days from the date of payment or satisfaction.

Therefore:

New security created → CHG-1

Registered security fully satisfied → CHG-4

This distinction is fundamental.

CHG-1 vs CHG-4 at a Glance

The exact transaction and applicable rules should always be checked before filing.

Example: A Company Takes a Bank Loan

Suppose a Delhi company obtains:

₹2 crore term loan

from a bank.

The bank takes security over:

• Land

• Building

• Machinery

The company should examine whether the security constitutes a registrable charge.

If applicable, the company needs to register the charge with the ROC through the prescribed process, generally using CHG-1 for a charge other than a debenture-related charge.

The compliance process does not end when the bank disburses the loan.

The company should also ensure that:

• Charge documents are executed

• Relevant particulars are correctly captured

• ROC filing is completed

• SRN and acknowledgement are preserved

• Charge registration records are maintained

What Happens When the Loan Is Fully Repaid?

Suppose the same company repays the entire ₹2 crore loan.

The company may assume:

"The loan is closed, so the MCA charge is automatically closed."

That assumption can create a compliance problem.

The registered charge needs to be dealt with separately.

Where the charge has been paid or satisfied in full, the company is required to intimate the Registrar using CHG-4 within the applicable statutory period. The MCA instruction kit specifies 30 days from the date of payment or satisfaction.

Therefore:

Loan repayment ≠ automatic ROC satisfaction

The company should complete the charge-satisfaction process.

Why Charge Satisfaction Matters?

A charge appearing as outstanding on MCA records can create practical problems even when the underlying loan has already been repaid.

For example, during due diligence, a potential investor checks the company's MCA master data and sees:

Charge status: Outstanding

The management says:

"The loan was repaid two years ago."

The investor may then ask why the MCA records have not been updated.

This can lead to additional documentation and reconciliation work.

Practical Example: Noida Manufacturing Company

A Noida manufacturing company takes a machinery loan of:

₹50 lakh

The machinery is charged in favour of the lender.

The company completes the applicable charge registration.

Three years later, the loan is fully repaid.

The company receives:

• Loan closure confirmation

• No-dues confirmation

• Release of security documentation

The company should then examine the CHG-4 filing requirement and submit the satisfaction filing within the applicable timeline.

The internal file should contain:

• Original charge details

• Loan account details

• Loan closure letter

• No-dues certificate

• Security-release documents

• CHG-4 filing acknowledgement

Practical Example: Gurugram Company Modifies an Existing Charge

Suppose a Gurugram company already has a registered charge of:

₹1 crore

against certain assets.

The lender subsequently modifies the security arrangement and the amount or terms of the charge change.

This may constitute a modification of charge, rather than a completely new charge.

CHG-1 is used for applicable modification filings as well as creation of charges other than debenture-related charges.

The company should therefore review:

• Existing charge number

• Original charge documents

• Modified sanction letter

• Revised security documents

• Changed amount

• Changed assets

• Changed terms

• Lender consent

before filing.

Creation of Charge vs Modification of Charge

These are different events.

Creation

A company creates a new security interest.

Example:

A company takes a new ₹3 crore secured loan and mortgages a property to the lender.

Modification

An existing registered charge is changed.

For example:

• Charge amount changes

• Secured assets change

• Terms of security change

• Security structure changes

• Charge-holder details change where applicable

The company should determine the correct filing treatment instead of automatically creating a second charge record.

What Does "Satisfaction of Charge" Mean?

Satisfaction generally refers to payment or satisfaction in full of the registered charge.

The MCA CHG-4 Instruction Kit expressly describes the form as the form for intimating the Registrar about payment or satisfaction in full of a registered charge.

In practical terms, this commonly happens when:

• Bank loan is fully repaid

• Working-capital facility is closed

• Term loan is settled

• Secured borrowing is fully discharged

• The lender releases the relevant security

However, the exact circumstances should be reviewed against the charge documents and applicable law.

CHG-1 Filing Timeline

The registration of a charge should be handled within the statutory framework under Section 77.

The company should not wait until the loan is already old before considering the charge filing.

A practical compliance workflow is:

Loan sanction → security documentation → charge creation → CHG-1 process → ROC registration → charge records

The exact statutory filing period and any applicable additional-period provisions should be checked based on the transaction date and current rules.

Why Timing Matters for CHG-1

A delay in charge registration can create serious compliance complications.

The company may have:

• A signed loan agreement

• Disbursed funds

• Executed mortgage documents

• A lender waiting for ROC registration

but still have an incomplete ROC compliance record.

The company should therefore coordinate the finance team, legal team, lender and company secretary/accountant before the transaction is completed.

What Documents Are Generally Needed for CHG-1?

The exact documents depend on the nature of the security.

Common records may include:

• Loan agreement

• Sanction letter

• Hypothecation agreement

• Mortgage documents

• Debenture/security documents where applicable

• Board resolution

• Security agreement

• Asset details

• Charge-holder details

• Amount secured

• Terms of the charge

• Other supporting documents prescribed for the filing

The MCA CHG-1 Instruction Kit specifically requires supporting documentation to be attached in the prescribed format.

What Documents Are Needed for CHG-4?

For satisfaction, the company should maintain evidence showing that the charge has been paid or satisfied.

Depending on the transaction, this may include:

• Loan closure letter

• No-dues certificate

• Lender confirmation

• Release letter

• Satisfaction/release documentation

• Relevant charge details

• Other supporting documents required by the filing

The MCA CHG-4 Instruction Kit states that the form is filed to intimate the Registrar of payment or satisfaction in full.

CHG-1 and Bank Loans

Bank financing is one of the most common situations where companies encounter charge-registration requirements.

A company may obtain:

• Term loan

• Cash credit

• Overdraft facility

• Working capital facility

• Machinery finance

• Property-backed loan

Depending on the security structure, one or more charges may be created.

The compliance team should therefore review the complete sanction and security package rather than looking only at the loan amount.

CHG-1 and Hypothecation

Hypothecation is commonly used for movable assets.

For example, a lender may take security over:

• Inventory

• Receivables

• Machinery

• Vehicles

• Other movable assets

The exact legal treatment depends on the transaction documentation and applicable law.

Where a registrable charge is created, the company should consider the prescribed ROC filing.

CHG-1 and Mortgage

A mortgage can involve immovable property.

For example:

A company owns commercial property worth:

₹5 crore

and obtains a:

₹2 crore secured loan

against the property.

The security arrangement may create a charge requiring registration.

The company should coordinate the property/security documentation with the MCA charge filing.

CHG-1 Does Not Mean the Company Has Received a Loan

Another common misunderstanding is that CHG-1 itself reports the loan.

It does not function simply as a general loan reporting form.

Its purpose is to register the charge/security interest created over company assets.

Therefore, two companies may have similar loan amounts but different charge requirements depending on how their financing is structured.

CHG-4 Does Not Mean the Loan Was Forgiven

Satisfaction of a charge should not automatically be interpreted as loan waiver.

A charge can be satisfied because the underlying secured obligation has been paid and the security is being released.

The company should maintain the actual lender documentation explaining the closure.

What If the Loan Is Repaid but the Charge Remains on MCA?

This situation should be addressed promptly.

The company should first verify:

• Charge identification number

• Charge-holder name

• Original charge amount

• Loan account

• Repayment date

• Closure letter

• Whether all secured obligations have actually been discharged

If the charge has genuinely been satisfied, the company should proceed with the applicable satisfaction process.

The MCA CHG-4 framework specifically provides for reporting payment or satisfaction in full to the Registrar.

What If Only Part of the Loan Is Repaid?

Partial repayment does not automatically mean that the entire charge has been satisfied.

For example:

Original secured borrowing:

₹1 crore

Amount repaid:

₹60 lakh

Outstanding:

₹40 lakh

The charge may continue to secure the remaining obligation depending on the security documents.

Therefore, the company should not file CHG-4 merely because a portion of the loan has been repaid.

The relevant question is whether the registered charge has been paid or satisfied in full.

Multiple Charges on the Same Asset

A company can potentially have multiple charges involving the same asset depending on the security structure and applicable consent/inter-creditor arrangements.

The MCA CHG-1 Instruction Kit specifically notes that a company can have multiple charges over the same asset if the charge-holder gives the required consent.

For this reason, the compliance team should not assume that one asset automatically corresponds to only one charge.

Example: Property With Multiple Financing Arrangements

Suppose a company owns a commercial property in South Delhi.

It has:

Bank A: ₹2 crore secured loan

Bank B: ₹1 crore secured facility

Both arrangements involve security over the property.

The company needs to examine the relevant charge documents, priority arrangements and ROC records carefully.

When one facility is repaid, the company should determine which charge is being satisfied and whether the other charge continues.

Charge Number Is Important

Once a charge is registered, the company should preserve its ROC charge details.

The charge number can be useful when:

• Filing modification

• Filing satisfaction

• Conducting due diligence

• Reviewing MCA master data

• Communicating with the lender

• Preparing annual compliance records

The company should maintain a central charge register containing all active and satisfied charges.

Internal Charge Register

A useful internal register can include:

This makes future CHG-1 and CHG-4 compliance easier.

Common Mistake: Assuming Bank Closure Is Enough

A bank's loan closure process and MCA charge-satisfaction process are related but should not be treated as the same administrative step.

A company may receive a loan closure letter but still need to complete the applicable MCA filing.

The compliance team should therefore include ROC charge satisfaction in the loan-closure checklist.

Common Mistake: Missing the CHG-4 Deadline

The MCA CHG-4 Instruction Kit states that satisfaction should be intimated within 30 days from the date of payment or satisfaction in full.

A company that waits several months after repayment increases the risk of:

• Additional compliance work

• Additional filing costs

• Documentation difficulties

• Due-diligence queries

• MCA record inconsistencies

The best time to initiate the satisfaction process is immediately after receiving the lender's closure documentation.

Common Mistake: Filing CHG-4 Before Full Satisfaction

Another mistake is treating partial repayment as full satisfaction.

If the company still has an outstanding secured obligation, it should not assume that CHG-4 is appropriate.

The underlying loan and security documents should be reviewed before filing.

Common Mistake: Not Updating Internal Records

Even after the MCA filing is completed, the company should update:

• Charge register

• Loan register

• Fixed-asset/security records

• Finance records

• Board records where applicable

• Due-diligence folder

The objective is to ensure that internal records and MCA records tell the same story.

Common Mistake: Not Reconciling MCA Records With the Lender

Suppose MCA shows:

Charge amount: ₹1 crore

The lender's current documentation shows:

Facility closed

The company should investigate the mismatch rather than assuming the MCA record will update automatically.

The lender and company should coordinate the satisfaction process.

Practical CHG-1 Workflow

A company creating a new charge can use the following process:

Step 1: Review the financing documents

Identify the facility, lender and security.

Step 2: Identify the assets charged

Determine exactly which company assets or undertakings are being secured.

Step 3: Determine the charge particulars

Record:

• Amount

• Nature

• Terms

• Charge-holder

• Assets

• Date of creation

Step 4: Prepare supporting documents

Collect the executed loan and security documentation.

Step 5: Prepare CHG-1

Enter the applicable charge details accurately.

Step 6: Verify DSC and filing requirements

Ensure the authorised signatory and professional requirements are correctly handled.

Step 7: Submit to MCA

File within the applicable statutory period.

Step 8: Preserve the SRN and approval

Maintain the complete filing record.

Practical CHG-4 Workflow

When a secured loan is closed:

Step 1: Confirm full repayment

Verify that the secured obligation has been fully discharged.

Step 2: Obtain lender documentation

Collect the closure/no-dues/release documentation.

Step 3: Identify the registered charge

Verify the charge number and original filing.

Step 4: Confirm satisfaction date

Establish the actual date of payment or satisfaction.

Step 5: Prepare CHG-4

Provide the required satisfaction particulars.

Step 6: Obtain required confirmation/certification

Complete the applicable filing requirements.

Step 7: File within the statutory period

The MCA instruction kit specifies 30 days from payment or satisfaction in full.

Step 8: Preserve the acknowledgement

Keep the approved filing and supporting documents with the company's charge records.

CHG-1 and CHG-4 Compliance Checklist

Before completing the process, check:

• Is a registrable charge being created?

• What assets are being offered as security?

• Who is the charge-holder?

• What is the secured amount?

• Is the charge new or a modification?

• Is CHG-1 applicable?

• Are the loan/security documents complete?

• Has the statutory filing period been checked?

• Has the MCA filing been completed?

• Has the charge number been recorded?

• Has the company maintained the charge register?

• Has the loan been fully repaid before considering satisfaction?

• Has the lender issued closure/release documentation?

• Has the satisfaction date been established?

• Is CHG-4 applicable?

• Is CHG-4 being filed within the applicable timeline?

• Has the MCA record been checked after filing?

Why Businesses in Delhi NCR Should Track Charges Carefully ?

Businesses in Delhi, Noida, Gurugram, Ghaziabad and Faridabad frequently use secured banking facilities for:

• Working capital

• Property acquisition

• Machinery

• Expansion

• Inventory financing

• Business infrastructure

As financing arrangements increase, maintaining an accurate charge register becomes increasingly important.

A company may have several lenders and several security arrangements at the same time.

Without proper tracking, management may struggle to answer a simple question:

Which company assets are currently charged, to whom, and for what amount?

A properly maintained charge register makes that information immediately available.

Final Takeaway

CHG-1 and CHG-4 deal with two different stages of a company's charge lifecycle.

CHG-1 is generally used for registration of creation or modification of a charge other than charges related to debentures.

CHG-4 is used to intimate the Registrar about payment or satisfaction in full of a registered charge, with the MCA instruction kit specifying a 30-day period from the date of payment or satisfaction.

The practical compliance cycle is:

Finance obtained → Security created → CHG-1 → Charge registered → Loan repaid → Lender releases security → CHG-4 → Charge satisfaction recorded

For companies in Delhi, Noida, Gurugram and across India, the safest approach is to maintain a live charge register and connect every financing transaction with its corresponding MCA compliance.

A loan should therefore not be considered completely closed from a corporate-compliance perspective merely because the bank account shows a zero balance. The corresponding ROC charge records should also be reviewed and, where applicable, updated through the satisfaction process.

Need Help With CHG-1 or CHG-4?

If your company needs assistance with charge registration, modification of charge, CHG-1, charge satisfaction through CHG-4 or broader ROC/MCA compliance, FilingSuvidha can help coordinate the applicable compliance process.

Website: FilingSuvidha
Phone: +91-9625995981
Email: info@filingsuvidha.com

Our focus is on transparent pricing and on-time delivery.

Disclaimer

This article is intended for general informational purposes only and should not be treated as legal, company-secretarial, accounting or professional advice. Charge registration and satisfaction requirements can depend on the nature of the borrowing, security documents, company type, charge structure and applicable provisions in force at the relevant time. Companies should verify the latest MCA forms, rules, notifications and statutory provisions before filing.