Proposed Amendments in COMPANIES (REGISTRATION OF CHARGES) RULES, 2014

6.1 It was pointed out that as per the existing MCA-21 system, filings in respect of companies, which have not filed Balance Sheet or Annual Returns for three years, are blocked. In view of this, Asset Reconstruction Companies (ARCs), which acquire Non-Performing Assets (NPAs) of such companies, are unable to file for creation/modification of charges in respect of such companies. For the companies under liquidation, ARCs have an option to file an application before the Hon’ble High Court for securing their right as secured creditor but the same remedy is not available for companies which have a dormant status but are not in liquidation. The Committee upon examination found that there is nothing in the Act or the Rules that does not allow ARCs to create charges on the NPAs of dormant companies acquired by them. The Committee recommended that, in order to protect interest of ARCs and for capital circulation, the MCA21 system should be modified to allow for filings of charge creation/modification by recognized ARCs on the assets of such companies.