Statutory Registers Of A Company: MGT-1, MGT-2, SH-1, CH-7

Statutory Registers of a Company: MGT-1, MGT-2, SH-1, CH-7

 

Meghna had been running her private limited company in Kolhapur for seven years. Decent turnover, clean GST filings, TDS in order. When she decided to apply for a bank loan against the company's assets, the bank's legal team asked for her statutory registers.

She called her previous accountant. He had no idea where they were. They checked the company's files — nothing. They checked old laptops — nothing. The registers had simply never been maintained. Not once in seven years.

The bank put the loan on hold. A Company Secretary was called in on an urgent basis. It took six weeks, multiple affidavits, and a reconstruction exercise to bring the records up to date. The loan was eventually sanctioned — but the six weeks cost her a business opportunity that had come with a deadline.

This is the problem with statutory registers. Nobody thinks about them until someone asks for them. And by then, the absence of seven years of records is not a small problem to solve.

Every company incorporated under the Companies Act, 2013 is legally required to maintain a set of statutory registers. These are permanent records — not annual filings, not one-time documents, but ongoing books that must be updated every time something changes. They live at the registered office of the company (or an approved alternate location). They can be inspected by members, debenture holders, and in some cases, the public.

Let us go through the key ones — what they are, what exactly goes into them, and what happens when they are not maintained.

 Why Statutory Registers Exist

Before getting into the individual registers, it helps to understand what purpose they serve.

A company is a legal person. It has shareholders, directors, charges on its assets, debenture holders, and a range of other stakeholders. All of these relationships need to be recorded somewhere that is reliable, accessible, and tamper-evident. Statutory registers serve that purpose.

They are the source of truth for the company's ownership structure, its management, its financial obligations secured against assets, and the securities it has issued. When a bank does due diligence before a loan, when an investor checks who actually owns what, when the ROC audits a company — the statutory registers are what they look at.

 

Maintaining them is not optional. Section 88 of the Companies Act, 2013 and the rules made thereunder make it mandatory. Non-maintenance is a criminal offence under Section 447 read with Section 88(4), and the penalty applies both to the company and to every officer who is in default.

 Register of Members MGT-1

The Register of Members is the first and most important statutory register. It records every person who is or has been a member (shareholder) of the company.

Legal Basis

Section 88(1)(a) of the Companies Act, 2013 requires every company to maintain a Register of Members in the prescribed form. The prescribed form for companies having share capital is Form MGT-1 under Rule 3(1) of the Companies (Management and Administration) Rules, 2014.

What Goes Into MGT-1

The register must contain the following particulars for each member:

The name of the member in full — not initials, not abbreviations. The father's name, mother's name and spouse's name (as applicable). The address — residential, not just a city name. The email address. The date on which the person became a member. The date on which they ceased to be a member, if applicable. The number of shares held and the class of shares. The amount paid up on those shares. The folio number assigned to that member. The distinctive numbers of the shares held.

If shares are transferred, the register must be updated on both sides — the transferor's entry is updated to show the reduced holding or cessation, and the transferee's entry is created or updated with the new holding.

When Must It Be Updated?

The register must be updated within 7 days of the completion of the allotment or transmission of shares. Within 30 days from the date of registration of transfer of shares for transfers. If the company holds an AGM and new members have come in during the year, all entries must be current before the AGM.

Where Is It Kept?

At the registered office of the company. If the company outsources secretarial or registrar work to a Registrar and Transfer Agent (RTA), the register can be maintained at the RTA's office — but this must be approved by a Board resolution and intimated to the ROC in Form MGT-3.

Right of Inspection

Any member of the company can inspect MGT-1 without paying any fee. Any other person can inspect it on payment of a prescribed fee. The inspection must be provided during business hours, for at least 2 hours per day. Refusal to allow inspection invites a penalty.

Index of Members

Every company with more than 50 members must also maintain an index of members — essentially an alphabetical index linked to the register. This makes it easy to locate any particular member's entry without going through every page. The index must be kept at the same place as the register and updated whenever the register is updated.

 Register of Debenture Holders / Other Security Holders — MGT-2

If a company has issued debentures or any other securities — other than shares — it must maintain a separate register for those holders.

Legal Basis

Section 88(1)(b) of the Companies Act, 2013 requires every company that has issued debentures or other securities to maintain a Register of Debenture Holders or Other Security Holders. The prescribed form is Form MGT-2 under the same Rules.

What Goes Into MGT-2

Similar to MGT-1 but for debenture holders. The name, address, email, occupation, date of becoming a debenture holder, date of cessation, amount of debentures held, the series and class of debentures, the distinctive numbers assigned, and details of the trust deed (if applicable) are all recorded here.

For other securities — such as warrants, optionally convertible instruments, or other hybrid instruments — the relevant details of those instruments are entered in the corresponding columns.

Why Companies Miss This

MGT-2 is the register that companies most commonly forget. The reason is straightforward — most small and mid-size private limited companies do not issue debentures. They raise money through equity or through loans. So they never need MGT-2 and never think about it.

But the moment a company issues Non-Convertible Debentures (NCDs) — which some companies do to raise debt from HNIs or family investors rather than banks — MGT-2 becomes mandatory. And because it was not set up from the beginning, the records are absent.

If you have ever raised money through any instrument that is not plain equity shares or a plain loan, check whether MGT-2 applies to you.

Inspection Rights

Same as MGT-1. Members and debenture holders can inspect without fee. Others on payment of a prescribed fee.

 Register of Shares and Other Securities Allotted — SH-1 (Share Certificate Register)

Now we come to SH-1. There is sometimes confusion about what SH-1 is, so let us be precise.

SH-1 is the format prescribed under the Companies (Share Capital and Debentures) Rules, 2014 for a Share Certificate itself. The formal name for the register where these are tracked is often referred to in practice as the Register of Share Certificates or the Certificate Register — and it is maintained in the SH-1 format.

Legal Basis

Rule 5(1) of the Companies (Share Capital and Debentures) Rules, 2014 requires every company to maintain a Register of Renewed and Duplicate Share Certificates. The format and specifics tie back to the share certificate format under SH-1.

What Is SH-1?

SH-1 is the format of the share certificate itself — the physical or electronic document given to a shareholder as evidence of their ownership. Under Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014, every share certificate must be in Form SH-1.

A valid SH-1 share certificate must contain:

The name of the company and its CIN. The registered office address. The name of the member. The folio number. The certificate number. The number of shares it represents and the class of shares. The distinctive numbers of those shares. The amount paid up per share. The date of issue. The common seal of the company (if applicable) or the signatures of at least two directors and the Company Secretary or any authorised officer.

The Register Behind SH-1

The company maintains a register tracking every share certificate issued, cancelled, renewed or duplicated. When an original certificate is cancelled — for example after a transfer — it is marked as cancelled and the new certificate details are entered. When a duplicate is issued due to loss, the original certificate number is cross-referenced.

This register is the internal record that ties the certificate issued (SH-1) to the Register of Members (MGT-1). If these two do not reconcile — if the certificates issued do not match the entries in the members' register — there is a serious internal control failure.

Common Problem: Certificates Never Issued

In many small private limited companies, share certificates were simply never issued to the shareholders. Promoters know who holds what, but the physical certificates were never made. This is a violation of the Companies Act — Section 56(4) requires a share certificate to be issued within 2 months of allotment (for other than rights issues) and within 1 month of registration of transfer.

When these companies later go for due diligence — for a loan, for an acquisition, for a funding round — the absence of share certificates becomes an issue that takes weeks to rectify.

 Register of Charges CH-7

Every time a company creates a charge on its assets — mortgages its land to a bank, hypothecates its machinery to a lender, pledges its receivables for a working capital facility — that charge must be registered with the ROC. And it must also be recorded internally in the Register of Charges.

Legal Basis

Section 85 of the Companies Act, 2013 requires every company to maintain a Register of Charges, which must contain the particulars of all charges on the company's property or assets. The prescribed form is Form CHG-7 (also written as CH-7 in practice) under Rule 10 of the Companies (Registration of Charges) Rules, 2014.

What Goes Into CH-7 / CHG-7

For every charge created by the company, the register must contain:

The date of creation of the charge. A short description of the property or assets charged. The amount secured by the charge. The name and address of the charge holder (the lender). The type of charge — whether it is a fixed charge (on specific assets) or a floating charge (on a pool of changing assets). The date of satisfaction of the charge, if and when the loan is repaid and the charge is released. Whether the charge was created in India or outside India. The rate of interest (if applicable). The terms and conditions of the charge.

What Is the Difference Between Filing with ROC and Maintaining CH-7?

These are two separate obligations and people often confuse them.

When a charge is created, the company must file Form CHG-1 with the ROC within 30 days of creation. This is the public filing — the ROC's database shows the charge so that anyone searching the company's MCA records can see that its assets are encumbered.

CH-7 is the internal register — maintained at the registered office. It is the company's own permanent record of every charge, past and present. Even after a charge is satisfied and removed from ROC records, the CH-7 continues to show the historical entry along with the date of satisfaction.

The two must match. If the company has filed CHG-1 with the ROC for a particular charge, the same charge must be in CH-7. If the ROC records show a satisfied charge but CH-7 still shows it as live — or vice versa — there is a reconciliation problem.

Why CH-7 Gets Neglected

Because most people think registering the charge with the ROC is the complete obligation. They file CHG-1, they get the ROC acknowledgment, and they stop there. CH-7 never gets updated. Sometimes it does not even exist.

When a bank does due diligence before a second loan and asks for CH-7, and the company cannot produce it or produces an incomplete register, it creates unnecessary complications and raises questions about overall compliance hygiene

 Other Registers a Company Must Maintain

MGT-1, MGT-2, SH-1 (certificate register) and CH-7 are the most frequently discussed, but the Companies Act requires companies to maintain several other registers as well. Depending on the nature of the company, these may also apply.

Register of Directors and Key Managerial Personnel

Under Section 170 of the Companies Act, every company must maintain a register showing the shareholding of every director and KMP. This register records when each director or KMP acquired shares or debentures in the company, what they acquired, at what price, and any subsequent changes. This is separate from MGT-1 and covers only the directors' and KMPs' own shareholding.

Register of Contracts or Arrangements in Which Directors Are Interested

Under Section 189, every company must maintain a register recording all contracts or arrangements in which a director has a direct or indirect interest. When a director enters into any transaction with the company — sale of property, loans, professional services — it goes into this register. The director must declare their interest, and the declaration is noted in this register.

Register of Loans, Investments, Guarantees and Securities

Under Section 186, every company must record every loan given, every investment made, every guarantee provided, and every security offered on behalf of other companies or persons. This register captures the company's financial exposure to others.

Minutes Books

While not typically called a "register," Minutes Books are statutory records under Section 118. Every board meeting and every general meeting must have its minutes recorded in the Minutes Book within 30 days of the meeting. These are bound, maintained at the registered office, and signed by the chairman. They are as important as any register.

 Format, Location and Inspection: The Practical Rules

Physical vs. Electronic

Registers can be maintained either in physical form (hardbound books, written or typed entries) or in electronic form. If maintained electronically, the company must ensure they can be reproduced in a readable format at any time and that they have proper backup and security measures.

Most companies today maintain these registers as part of their secretarial software or in spreadsheet form. That is acceptable as long as the records are complete, accurate and accessible.

Location

All statutory registers must be kept at the registered office of the company. If the company wants to keep any register at a place other than the registered office — say at the corporate office or at an RTA's office — it must pass a Board resolution, maintain a copy of the resolution at the registered office, and intimate the ROC in Form MGT-3 within 7 days of the resolution.

Inspection and Extracts

Under Section 94 of the Companies Act, members and debenture holders can inspect the registers at the registered office during business hours (at least 2 hours per working day). Members can take extracts without paying fees. Non-members may inspect on payment of a prescribed fee.

The registers must also be available at every Annual General Meeting. Any member attending the AGM has the right to inspect the registers there.

Penalty for non-maintenance

If a company does not maintain its statutory registers, or refuses to allow inspection, the company and every officer in default face a fine. Under Section 88(4), the penalty is a fine which shall not be less than Rs. 50,000 but which may extend to Rs. 3 lakh, and for continuing failure, a further fine of Rs. 1,000 per day. These are not trivial amounts for a small company.