Charge creation is a vital process aimed at protecting the capital of lenders by securing it against fixed or floating assets of borrowers, as per the Company's Act 2013 or LLP Act 2008 with the Ministry of Corporate Affairs (MCA). At GHL INDIA, we specialize in facilitating charge creation processes to safeguard the interests of both lenders and borrowers.
What is Charge Creation?
Charge Creation Process for Debenture Plan
Charge Creation Process for LLP Plan
Protection and Liquidation
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Charge creation involves establishing a legal claim or encumbrance on specific assets owned by a borrower to secure the repayment of debt or the fulfillment of financial obligations to the lender. This process provides assurance to lenders that their capital is protected against default by borrowers, thereby mitigating risk and fostering trust in financial transactions.
The charge creation process for a debenture plan involves several steps to ensure the protection of the lender's capital. At GHL INDIA, we streamline this process to safeguard the interests of our clients effectively. Here's how we execute the charge creation process for a debenture plan:
We initiate fund mobilization by issuing debentures and channeling the raised funds into the bank account of the Special Purpose Vehicle (SPV).
Once the funds are mobilized, we proceed to purchase the designated asset in the name of the SPV. This asset serves as collateral to secure the lender's capital.
To oversee the charge creation process and protect the interests of both lenders and borrowers, we appoint a debenture trustee. The trustee acts as a custodian of the debenture holders' interests throughout the transaction.
The final step involves registering the mortgage deed with the Ministry of Corporate Affairs (MCA) through the submission of charge creation form CHG-9. This formal registration ensures legal recognition of the charge created on the asset, further securing the lender's capital.
For an LLP plan, the charge creation process involves:
Mobilize funds in the bank account of the Special Purpose Vehicle (SPV).
Create a hypothecation agreement on the floating asset to secure the lender's capital.
Register the hypothecation agreement with MCA through charge creation form 8
Once the charge is created upon the asset or floating asset, the asset cannot be liquidated without the consent of the relevant authorities. If GHL INDIA intends to liquidate the asset, it must settle the capital of all investors or replace the asset with another of equal value, ensuring the protection of the investors' capital.
Through our charge creation services, GHL INDIA ensures the absolute protection of investors' capital. We are committed to creating a prosperous environment that serves the world at large.
Protect your capital and secure your investments with GHL INDIA's charge creation services. Our experienced team is dedicated to providing reliable and efficient solutions to safeguard your financial interests. Contact us today to learn more about how we can assist you in creating a secure environment for your investments.
