The process for creation of charge begins with passing of a board resolution by the Board of Directors of the Company for availing loan from the lender and includes execution of relevant loan documents or deeds. Once, the borrower and the lender agree on the terms and conditions of the loan or financial assistance, they both sign on the loan document and other relevant paperwork. Once, the loan documents are signed, the charges over the properties of the company have been created. A charge on a company is a right created by a company the borrower on its assets and properties, present and future, in favor of a financial institution or bank the lender. Most companies and LLPs borrow from banks and financial institutions to finance their short-term and long-term capital requirements. To secure the funds lent to the company, banks use a number of legal documents like loan agreements, hypothecation agreements, mortgage deeds, etc., to lay out the terms of the loan and ensure repayment with interest as per schedule.
Companies and LLPs have the ability to borrow from a number of banks or financial institutions based on their financial requirements, therefore it is then important to track the assets pledged to the banks and the loans provided to ensure security for the lenders. In this aspect, the creation of charges over the assets of a company helps lenders know the lenders of the company and the assets pledge to the lenders – thereby avoiding double financing. The charges on a company  is public information and can be found in the MCA website.