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Board Resolution for Mortgage and Creation of Charge
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors
________________
CIN: ________________
Date of Meeting: __________ at __________ Hours at the Registered Office of the Company.
SUBJECT: Authorization to Mortgage, Charge, and Create Security Over Company Assets
RESOLVED THAT pursuant to the provisions of Section 180(1)(a) of the Companies Act, 2013, the consent of the Board be and is hereby accorded for creation of charge/mortgage/pledge/hypothecation/security on all or any of the moveable and/or immovable properties of the Company, whether tangible or intangible, present and future assets.
RESOLVED FURTHER THAT any Director of the Company be and is hereby authorised to execute loan agreements, security documents, and file Form CHG-1 with the ROC.
Signature
Board Resolution to Authorize Mortgage and Creation of Charge
Corporate Finance Documentation for Indian Companies
Introduction
A Board Resolution to Authorize Mortgage and Creation of Charge is a formal corporate document that records the Board of Directors' consent to create security over the company's assets for borrowings. Under the Companies Act, 2013, when a company intends to mortgage, pledge, hypothecate, or create any charge over its moveable or immovable properties to secure loans from financial institutions or banks, prior board approval is mandatory. This resolution forms an essential part of the documentation required by lenders before disbursement of funds.
This resolution specifies the nature and extent of charge to be created, the assets to be encumbered (including present and future assets), the name of the lending institution(s), and the purpose of borrowing. The document authorises directors to execute security documents, loan agreements, and other related instruments. Companies must also file Form CHG-1 (for creation of charge other than debentures) or Form CHG-9 (for modification of charge) with the Registrar of Companies within the prescribed time to register the charge.
Benefits of Using a Standard Format
Utilising a professionally drafted board resolution format ensures that all statutory requirements under the Companies Act, 2013 and the Companies (Meetings of Board and its Powers) Rules, 2014 are properly addressed. A ready-to-use template saves valuable time during loan processing, reduces the risk of procedural errors, and provides a consistent framework that meets the documentation requirements of banks and financial institutions.
Relevance to Corporate Finance
Creation of charge is a significant corporate finance activity. Following Company Registration, businesses may require working capital facilities, term loans, or other credit arrangements from banks and financial institutions. The creation of security over company assets is a standard requirement for such borrowings.
The company must ensure that the charge is registered with the ROC within thirty days of creation. Proper documentation ensures compliance with statutory requirements and facilitates smooth disbursement of sanctioned facilities.
Board Resolution to Authorize Mortgage and Creation of Charge – Sample Format
Company Name: _______________________________________
CIN: _______________________________________
Registered Office: _______________________________________
Email: _______________________________________
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors of the Company
Date of Meeting: __.__.______
Time: ______ (Hours)
Venue: Registered Office of the Company
SUBJECT: AUTHORIZATION TO MORTGAGE, CHARGE, AND CREATE SECURITY OVER COMPANY ASSETS
The Chairman informed the Board that the Company proposes to avail credit facilities from banks/financial institutions to fund its business operations and expansion plans. The Company intends to optimize its capital structure while maintaining adequate liquidity for operations. The Board discussed the matter in detail and passed the following resolution unanimously:
"RESOLVED THAT pursuant to the provisions of Section 180(1)(a) of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 (including any statutory modification or re-enactment thereof for the time being in force), and subject to approval of the members of the Company and the Articles of Association of the Company, and subject to such other approvals as may be required under the Companies Act or any other applicable law, the consent of the Board of Directors be and is hereby accorded for creation of charge/mortgage/pledge/hypothecation/security, in such form and manner and with such ranking, at such time, and on such terms as the Board may determine, on all or any of the:
- Moveable and/or immovable properties of the Company, whether tangible or intangible;
- Present and future assets of the Company;
- Whole or any part of the undertaking(s) of the Company;
in favour of banks, financial institutions, lenders, agents, and/or trustees, for securing borrowings availed or to be availed by the Company by way of term loans (in foreign currency and/or Indian rupees), working capital facilities, and/or any other credit facilities sanctioned or to be sanctioned by banks/financial institutions to the Company, in terms of loan agreements or other documents containing such terms, conditions, and covenants in respect of enforcement of security as may be stipulated and agreed between the Company and the respective lenders from time to time, subject to the borrowing limits approved under Section 180(1)(c) of the Companies Act, 2013.
RESOLVED FURTHER THAT any Director of the Company, severally or jointly, be and is hereby authorised to:
- Finalise, settle, and execute loan agreements, security documents, deeds of mortgage, hypothecation agreements, and all related documents;
- File Form CHG-1 or other applicable forms with the Registrar of Companies for registration of charge within the prescribed time;
- Negotiate and agree upon the terms and conditions of borrowings and creation of security;
- Represent the Company before banks, financial institutions, and regulatory authorities;
- Do all such acts, deeds, matters, and things as may be necessary, proper, or expedient for giving effect to this resolution and to settle any question, difficulty, or doubt that may arise in regard to creating mortgages/charges as aforesaid."
CERTIFIED TRUE COPY
For ________________________________________
(Name of the Company)
Signature: __________________________
Name: __________________________
Designation: __________________________
DIN: __________________________
Date: __________________________
Place: __________________________
Frequently Asked Questions
1. Is the signature of all directors mandatory on the board resolution to authorize mortgage and creation of charge?
No, signatures of all directors are not mandatory. The resolution is passed by a majority of directors present and voting at a duly convened board meeting where quorum is present. The certified true copy may be signed by a single authorised director or the company secretary. Banks may have their own format requirements which should be verified beforehand.
2. Does the Board Resolution to authorize mortgage and creation of charge need to be certified by a professional?
There is no statutory requirement for the board resolution to be certified by an external professional. The certified true copy may be signed by any director or the company secretary. However, banks and financial institutions may request additional certification or attestation as per their internal documentation requirements. Some lenders may require notarisation of the resolution.
3. Is the Board resolution to authorize mortgage and creation of charge to be on company letterhead?
While there is no strict legal requirement mandating the use of company letterhead, it is standard corporate practice and is typically expected by banks and financial institutions. Using official letterhead adds authenticity to the document, facilitates easy identification and verification, and presents a professional appearance. Most lenders require the resolution on letterhead.
4. Who can be considered as an authorized signatory for the board resolution to authorize mortgage and creation of charge?
Any director present at the board meeting or the company secretary (if appointed) may be authorised to sign the certified true copy of the resolution. The Board typically designates one or more directors to execute loan agreements, security documents, file Form CHG-1 with the ROC, and represent the company before banks and financial institutions.
5. Which resolution is required for the board resolution to authorize mortgage and creation of charge?
A board resolution is required to authorize the creation of charge over company assets. The resolution should reference Section 180(1)(a) of the Companies Act, 2013 and must be subject to shareholder approval through a special resolution in general meeting. The board resolution serves as initial approval, while the special resolution provides the requisite member consent for disposal or encumbrance of substantial assets.
