Charge creation
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If a company is a guarantor, does it need to file e-form CHG-1 also for creation of charge?
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30-May-2022 05:17 AM /
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Yes,
As per section 77under Companies Act, 2013, A charge is a right created by any person including a company referred to as “the borrower” on its assets and properties, present and future, in favour of a financial institution or a bank, referred to as “the lender”, which has agreed to extend financial assistance.
– As per principle rule, who is giving its assets as security to bank for loan to other company/sister concern company, therefore assets of theguarantor company is involved, so charge will be create in theguarantor Company
– Here assets of the Borrower company are not involved in the security, therefore no need to create charge by Borrower.