Think of Section 85 as the company's loan and mortgage diary — a running record of every asset that has been pledged or mortgaged. Whenever Rajesh & Co. Pvt. Ltd. takes a bank loan and hypothecates its factory machinery, that charge must be recorded internally in this register. This section tells you exactly how that internal record must be maintained.
The rule is straightforward: every company must keep a Register of Charges at its registered office. This register must capture all charges — both fixed charges (attached to a specific asset like land or machinery) and floating charges (which hover over a class of assets like inventory or trade receivables and crystallise on a trigger event). The prescribed form and particulars are set out in the Companies (Registration of Charges) Rules, 2014. Importantly, it's not just the register — the original instrument creating the charge (think: the loan agreement, mortgage deed) must also be kept at the registered office alongside it. Many students forget this second requirement.
Now, who can inspect this register? Section 85(2) draws a clear line. Members (shareholders) and creditors can inspect it free of charge — no fees at all — during business hours. Makes sense: if you've lent money to a company, you have every right to know what else is mortgaged. Any other person (say, a prospective investor or supplier doing due diligence) can also inspect, but the company can charge prescribed fees and can impose reasonable restrictions via its Articles of Association. This is a favourite 4-mark question — examiners love asking who pays and who doesn't. Lock in that distinction: members/creditors = free; outsiders = fees apply.
Example 1: Inspection Rights
Ms. Iyer holds 500 equity shares in Sunrise Technologies Pvt. Ltd. Mr. Kapoor is a trade creditor owed ₹3,50,000 by the company. Mr. Verma is a supplier considering extending credit and wants to check the company's existing charges before deciding.
Question: Who can inspect the Register of Charges, and what fees apply?
Working:
- Ms. Iyer → Shareholder = Member → Inspection allowed, fees: NIL
- Mr. Kapoor → Creditor of the company → Inspection allowed, fees: NIL
- Mr. Verma → Neither a member nor a creditor; he is an outsider → Inspection allowed, but prescribed fees apply; company may also impose reasonable restrictions per its Articles
Final Answer: Ms. Iyer and Mr. Kapoor can inspect free of cost. Mr. Verma can inspect only on payment of prescribed fees, subject to restrictions in the Articles.
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Example 2: What must be kept at the registered office?
Alpha Manufacturing Ltd. takes a term loan of ₹2,00,00,000 (₹2 crore) from State Bank of India and creates a charge over its plant located in Pune.
Question: What documents must Alpha Manufacturing Ltd. maintain at its registered office under Section 85?
Working:
- Step 1: Enter the charge details in the Register of Charges in the prescribed form — asset details, charge amount ₹2,00,00,000, chargeholder (SBI), nature (fixed charge), etc.
- Step 2: Retain the original instrument (loan agreement/mortgage deed) at the registered office alongside the register.
Final Answer: Both the Register of Charges and the instrument creating the charge (the mortgage/loan deed) must be kept at the registered office.
📖 Bare Act text — Section 85, Companies Act 2013
(click to expand)
(1) Every company shall keep at its registered office a register of charges in such form and in such manner as may be prescribed, which shall include there in all charges and floating charges affecting any property or assets of the company or any of its undertakings, indicating in each case such particulars as may be prescribed: Provided that a copy of the instrument creating the charge shall also be kept at the registered office of the company along with the register of charges. (2) The register of charges and instrument of charges, kept under sub-section (1) shall be open for inspection during business hours— (a) by any member or creditor without any payment of fees; or (b) by any other person on payment of such fees as may be prescribed, subject to such reasonable restrictions as the company may, by its articles, impose.