Deposits under Companies Act, 2013: Meaning, Exclusions, DPT-3 & Shareholder Loans

Summary: The deposit provisions under the Companies Act, 2013 apply not only to ordinary fixed deposits but also to many loans and advances received by a company. Section 2(31) gives a broad meaning to “deposit”, while Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 excludes specified receipts from that definition. A shareholder loan is not automatically exempt merely because the lender holds shares in the company. Where the shareholder is also a director, the loan may qualify for the director-specific exclusion if the prescribed written declaration and other conditions are satisfied. A loan from a shareholder who is not a director is generally treated as a deposit, although the company must still examine whether another specific exclusion applies. Similar distinctions arise for loans from directors’ relatives, inter-corporate loans, bank loans, customer advances and share application money. Form DPT-3 is used for reporting deposits as well as specified outstanding receipts that are not considered deposits under Rule 2(1)(c). Companies should therefore identify the lender and nature of each receipt, verify the applicable exclusion and its conditions, maintain supporting documents and correctly classify outstanding amounts for DPT-3 reporting.

Introduction

The deposit provisions under the Companies Act, 2013 apply not only to ordinary fixed deposits but also to many loans and advances received by a company. The key issue is whether a receipt is specifically excluded from the definition of “deposit” under the Companies (Acceptance of Deposits) Rules, 2014.

A loan from a shareholder is not automatically exempt. If the shareholder is also a director and the required declaration is obtained, it can be treated as a transaction not considered as a deposit. However, if the shareholder is only a member and not a director, the loan is generally a deposit and should be reported accordingly in Form DPT-3.

Meaning of Deposit under the Companies Act, 2013

Section 2(31) of the Companies Act, 2013 gives a broad meaning to the word “deposit.” It includes money received by a company as a deposit, loan or in any other form. The statutory framework is further governed by the Companies (Acceptance of Deposits) Rules, 2014.

Therefore, the accounting name given to an amount—such as “unsecured loan,” “temporary funding,” “advance,” or “shareholder support”—does not by itself decide its legal treatment. The company must examine the nature and source of the receipt.

In simple words, where a company receives money and is required to repay it, the amount may be a deposit unless it falls within one of the specific exclusions in Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014.

Loan from a Director’s Friend

Suppose PQR Private Limited receives ₹8 lakh from a friend of one of its directors for two years, carrying interest at 10% per annum. The lender is neither a director nor a company/bank.

Merely being a friend of a director does not qualify the amount for the specific exclusion available to loans received from directors. Accordingly, assuming no other exclusion under Rule 2(1)(c) applies, the ₹8 lakh would generally be treated as a deposit.

Loan from a Shareholder who is not a Director

Similarly, if a shareholder who is not a director provides an unsecured loan to the company, the loan is not covered by the director-specific exclusion merely because the person is a shareholder.

Subject to checking whether any other exclusion under Rule 2(1)(c) applies, such amount would generally be treated as a deposit.

The company should accordingly consider the applicable provisions relating to acceptance of deposits and the reporting requirements in Form DPT-3.

Receipts Excluded from the Definition of Deposit

Some important excluded receipts are given below.

The current MCA DPT-3 form specifically contains a separate section for outstanding money or loans that are “not considered as deposits” under Rule 2(1)(c).

Key Distinction between Director, Relative, Friend and Shareholder Loans

• Director → Company: Can be excluded from deposits if the prescribed declaration and other conditions are satisfied.
• Relative of director → Private Company: Can be excluded if the prescribed conditions are satisfied.
• Friend of director → Company: Not excluded merely because they are a friend of the director.
• Shareholder who is not a director → Company: Not excluded merely because they are a shareholder.

“Generally considered a deposit” is preferable to simply saying “is a deposit,” because the company should still check whether another exclusion under Rule 2(1)(c) applies.

1. Loan from Another Company

If ABC Private Limited borrows ₹25 lakh from XYZ Private Limited, the amount is generally not considered a deposit, as an amount received from another company is covered by the exclusion under Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014.

For example, if a group company provides ₹25 lakh as working-capital support to its subsidiary, the amount may qualify as an inter-corporate loan and, subject to the applicable conditions, would generally be treated as an amount not considered as a deposit.

If the amount falls within the applicable Rule 2(1)(c) exclusion, it is reportable in Form DPT-3 as an amount not considered as a deposit, where the reporting requirements are applicable.

2. Customer Advance

Suppose a furniture manufacturer receives ₹3 lakh from a customer as an advance against the supply of office furniture. An advance received in connection with the company’s business may qualify for the relevant exclusion from the definition of “deposit,” subject to the conditions prescribed under Rule 2(1)(c).

Where the advance is adjusted against the supply of goods or services within the prescribed period, it can generally remain outside the definition of deposit.

However, if the advance is not adjusted within the prescribed period, and no applicable exception or extension is available, the amount may be treated as a deposit. Therefore, companies should maintain proper records and monitor outstanding customer advances to ensure that they continue to satisfy the applicable conditions.

3. Loan from Shareholder

A shareholder loan must be examined based on the lender’s role in the company. Being a shareholder alone does not make the loan exempt from the definition of deposit.

a. Shareholder who is also a Director

Where the lender is a director of the company at the time of giving the money, the amount can qualify for the exclusion from the definition of “deposit” under Rule 2(1)(c), provided the prescribed conditions are satisfied.

The key conditions include:

• The director gives a written declaration to the company at the time of giving the money.
• The declaration confirms that the money is not being given out of funds acquired by the director by borrowing or accepting loans or deposits from others.
• The company makes the required disclosure of the amount in its Board’s Report, as prescribed.

Example: Shareholder who is also a Director

Mr. A owns 45% of the shares in BT Private Limited and is also a director of the company. He gives ₹12 lakh to the company as an unsecured loan.

At the time of giving the money, Mr. A provides the required signed declaration confirming that the amount is not being given out of funds acquired by him through borrowing or by accepting loans or deposits from others. For example, he may state that the amount has been provided from his own funds.

In this situation, subject to satisfaction of all applicable conditions, the ₹12 lakh can qualify as an amount not considered as a deposit under Rule 2(1)(c).

If the amount remains outstanding at the end of the financial year, it may be required to be reported in Form DPT-3 under the category of amounts received but not considered as deposits under Rule 2(1)(c).

b. Relative of Director

A private company can receive money from a relative of a director and treat the amount as not considered a deposit, provided the prescribed conditions are satisfied.

The relative must give the company a written declaration at the time of giving the money stating that the amount is not being given out of funds acquired by the relative by borrowing or accepting loans or deposits from others. The company must also disclose the details of the money so accepted in its Board’s Report.

This specific exclusion is available for a relative of a director of a private company. It is not a general exemption available to relatives of directors of public companies.

Example: Loan from Relative of Director

Mrs. Neha is the wife of a director of BT Private Limited. She provides an unsecured loan of ₹6 lakh to the company.

At the time of giving the money, Mrs. Neha provides the prescribed written declaration confirming that the ₹6 lakh is not being given out of funds acquired by her by borrowing or accepting loans or deposits from others.

Subject to satisfaction of the applicable conditions, the ₹6 lakh can be treated as an amount not considered as a deposit under Rule 2(1)(c).

If the amount remains outstanding at the end of the financial year, it may be required to be reported in Form DPT-3 under the category of amounts received but not considered as deposits under Rule 2(1)(c). The DPT-3 format specifically provides for reporting such outstanding amounts.

c. Shareholder who is not a Director

If the lender is only a shareholder or member and is not a director, the loan is generally a deposit. Merely holding shares does not bring the loan within the director-loan exclusion.

A private company may be eligible for exemptions from certain requirements of section 73(2) where it accepts money from members within prescribed limits or satisfies other notified conditions. One commonly used exemption applies where the money accepted from members does not exceed 100% of the aggregate of:

• Paid-up share capital;
• Free reserves; and
• Securities premium account.

However, this private-company exemption relaxes certain compliance requirements for accepting deposits from members. It does not convert the member’s loan into a transaction not considered as a deposit under Rule 2(1)(c).

Example: Shareholder Loan within the Prescribed Limit

GPA Private Limited has the following financial position:

Ms. Kavita holds 20% shares in GPA Private Limited but is not a director. She gives an unsecured loan of ₹25 lakh to the company.

The ₹25 lakh is within 100% of the relevant base of ₹35 lakh. The private company may be able to use the applicable exemption from certain section 73(2) requirements, subject to satisfying all relevant conditions. But the amount remains a deposit from a member; it is not an excluded receipt under Rule 2(1)(c).

Therefore, if it remains outstanding on 31 March, it should be reported as a deposit in DPT-3.

What is Form DPT-3?

Form DPT-3 is the MCA form used for reporting deposits and specified outstanding receipts that are not considered deposits. It is filed under Rules 16 and 16A of the Companies (Acceptance of Deposits) Rules, 2014.

The MCA’s current form allows a company to select one of these purposes:

• Return of deposits;
• Particulars of transactions by a company not considered as deposits under Rule 2(1)(c); or
• Return of deposits and particulars of transactions not considered as deposits.

The annual form is generally filed on or before 30 June each year for the position as on 31 March of that financial year.

DPT-3 Treatment of Common Receipts

The statutory auditor’s declaration in DPT-3 relates to the particulars of deposits and liquid assets. The MCA instruction kit states that the auditor must certify these particulars where the form includes a return of deposits.

Practical Compliance Steps

• Identify the lender correctly: shareholder, director, director’s relative, company, bank, customer or employee.
• Do not assume that every shareholder loan is exempt.
• Obtain the director’s written declaration at the time money is received, not later as an afterthought.
• Obtain a similar declaration from the director’s relative where a private company relies on that exclusion.
• Pass an appropriate Board resolution for accepting the loan and authorising the filing.
• Maintain the loan agreement, lender confirmation, bank statement, repayment terms, interest terms and accounting records.
• Disclose director loans and eligible relative loans in the Board’s Report as required.
• Reconcile all loans, deposits, accrued interest and repayment balances as on 31 March.
• File DPT-3 within the applicable timeframe under the correct option.
• Obtain professional advice before filing where the lender is a shareholder but not a director, where declarations were not obtained, or where old advances have remained unpaid for a long period.

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Disclaimer: This article is intended for general understanding. Classification of a particular loan can depend on the company’s status, the date of receipt, the lender’s position on that date, the company’s financial figures, supporting documents and the latest MCA requirements. For an actual DPT-3 filing, the company should have its practising company secretary verify the transaction-wise classification.