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Questions and Answers
What happens to a floating charge in the event of Prism Limited failing to repay the security interest or entering liquidation?
What is the duty of a company regarding registration of charges under Section 77 of the Companies Act, 2013?
What can a company not do once a floating charge is converted to a fixed charge?
Which one of the following is not considered as a type of asset that can be charged according to Section 77 of the Companies Act, 2013?
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What type of charge is created when a company offers its property or assets as security for a loan?
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Under the Companies Act, 2013, what is the key distinguishing characteristic of a Fixed Charge?
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Which type of charge allows a borrowing company to use the assets under the charge but not sell them without permission?
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What type of charge is compulsorily registrable under the provisions of the Companies Act, 2013?
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What is the penalty for a company in default of complying with the provisions of Chapter VI of the Companies Act, 2013?
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Under the Companies Act, 2013, what is the consequence if the prescribed particulars of a charge are not filed within 30 days of its creation?
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What type of charge is created when an interest or lien is placed on the property or assets of a company as security?
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Which section of the Companies Act, 2013 deals with punishment for fraud if false information is furnished willfully?
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Study Notes
Charges and Company Responsibilities under the Companies Act, 2013
- A floating charge crystallizes into a fixed charge upon default, such as failing to repay a security interest or entering liquidation, giving the creditor increased rights over the company’s assets.
- Companies must register charges under Section 77 within 30 days of creation, ensuring legal protection for the secured creditors and maintaining transparency.
- Once a floating charge is converted into a fixed charge, the company cannot freely dispose of or sell the charged assets without the charge holder's consent.
- Under Section 77, immovable property is not considered a type of asset that can be charged—only movable assets are eligible.
- A charge created when a company offers its property or assets as security for a loan is known as a security charge.
- A Fixed Charge is characterized by its attachment to specific assets, preventing the company from using those assets during the duration of the charge without permission.
- A floating charge permits the borrowing company to utilize its assets but prohibits selling them without the lender's consent.
- A charge that is compulsorily registrable includes any type of charge created by a company on its assets, requiring compliance to protect the interest of the charge holders.
- Companies in default of Chapter VI provisions of the Companies Act, 2013 may face penalties, which can include fines or other sanctions as specified by the Act.
- If the prescribed particulars of a charge are not filed within the stipulated 30 days, the charge may become void against the liquidator and any creditors of the company.
- A charge characterized by the placement of an interest or lien on the property as security is referred to as a lien.
- Section 447 of the Companies Act, 2013 addresses punishment for fraud regarding the furnishing of false information willfully, imposing severe penalties on the offenders.
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Description
Explore concepts related to the registration of charges under the Companies Act, 2013, including the definition of 'charge' and consequences of non-compliance with Chapter VI. Test your knowledge on the legal framework governing charges on a company's property or assets.
