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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 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 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?
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?
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?
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?
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?
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?
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?
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?
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?
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?
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.
