Discharge of Charge by a Company- No way to delay

Some companies may not aware that when they get a loan from a bank they are creating a charge over its property or an undertaking under the Companies Act 2016, the creation of this charge must be registered with Companies Commissioner of Malaysia (CCM). The details of the creation will then be reflected in your company details and becoming a public document.

Many mistaken that as long as the company received the original title from the bank or release letter that the company is no longer required to serve the loan is sufficient to proof discharge of charge. As and when the company is getting a loan/ financing facilities from a bank, the new bank will post up query towards the existing charge which still appear on the company profile. Hence, the company must take this as an important step to update the said charge status from “existing status” to “satisfied”.

Under the law, a company shall lodge with CCM within 14days from the payment, satisfaction, release or cessation. The procedure could be simple. The bank must sign the instrument of satisfaction of charge and the director shall sign the satisfaction of charge form with statutory declaration. Thereafter, submit all the forms and instrument to CCM. CCM will issue a certificate of satisfaction of charge after the said registration. Your company charge details status will change to satisfied.

Throughout my few years in practise these are the problems encounter if you delay in attending the registration of satisfaction of charge:

• the bank may not have the records of your loan hence refuse to sign the instrument or delay to execute until there is any documentation proof;
• if a company is inactive and wish to strike off or voluntarily winding-up, this will delay the process;
• if the company is in the process of dissolution and vested into another company, the unsatisfied charge may create problem during or after the application and order.
• To obtain a court order for an extension of time to file if the effective date on the instrument has lapsed.

In short, company shall not delay in attending this process to avoid the potential problems.