Charge Creation and Loan Security: MCA Filing Risk Explained
Manage security from sanction and document execution through ROC registration, modification and satisfaction.
A lender may have a signed security document, but the company still has a separate obligation to register the charge. Missing the ROC clock can complicate enforceability, priority and insolvency analysis. The filing should be designed into the loan closing checklist, not left as a post-disbursement reminder.
Charge registration ordinarily starts with a 30-day filing window.
Additional and ad valorem fee routes exist, but later filing can prejudice rights acquired before registration.
Modification, acquisition of charged property and satisfaction also require action.
CHG-7 and underlying instruments must remain controlled and reconciled.
1. The operating framework
| Lifecycle stage | Company action | Evidence |
|---|---|---|
| Sanction | Map facility, borrower, guarantor, security provider and assets. | Sanction letter, term sheet and authority matrix. |
| Approval | Obtain Board/shareholder or investor consent where applicable. | Resolutions, Section 179/180 analysis and reserved-matter approval. |
| Execution | Sign facility and security documents; identify charge-creation date correctly. | Executed instruments, stamp/registration evidence and asset schedule. |
| ROC filing | File CHG-1 or CHG-9 as applicable within the statutory window and track certification. | Filed form, attachments, challan and ROC certificate. |
| Modification | File changes in amount, terms, assets or charge extent where registrable. | Amendment documents and modified certificate. |
| Satisfaction | Obtain lender release and file CHG-4; update CHG-7. | No-dues/release letter, form and satisfaction certificate. |
2. CFO playbook
- Create a security-closing checklist before first disbursement.
- Identify every charging entity; a group-company guarantor may have its own approvals and filings.
- Record the legal date of creation/modification—not merely the disbursement date.
- Use a 30/60/120-day escalation dashboard for post-2019 charges, with professional confirmation of the applicable route.
- Reconcile ROC charge data quarterly to bank confirmations, loan ledgers and fixed-asset records.
- Keep the company’s CHG-7 register current and preserve instruments for the required period after satisfaction.
- After repayment, do not rely only on a bank email; complete release, filing and register closure.
3. Practical example
A company signs a deed hypothecating receivables on 1 July, but the first drawdown is 20 July. The charge clock may run from document creation, not the drawdown. The legal and finance teams should agree the trigger date and file accordingly instead of waiting for the next monthly close.
4. Common failure points
- Treating sanction date, execution date and disbursement date as interchangeable.
- Filing only the parent company’s charge when subsidiaries also provide security.
- Ignoring modifications after facility enhancement or collateral change.
- Leaving satisfied charges open on MCA records.
- Assuming late registration has the same priority effect as timely registration.
5. Evidence folder
- Facility and security document index
- Approval memo and resolutions
- Charge-date determination
- CHG-1/CHG-9 pack and certificate
- CHG-7 register
- Quarterly lender/ROC reconciliation
- CHG-4 and release evidence
6. Finin2min takeaway
Design the evidence before the transaction.
Reliable compliance is the result of clear ownership, timely action, reconciled records and a documented escalation route—not a last-minute filing exercise.