Companies (Acceptance of Deposits) Amendment Rules, 2019- Analysis

The Ministry of Corporate Affairs (“MCA”) vide its notification dated 22nd January 2019, made certain amendments to the Companies (Acceptance of Deposits) Amendment Rules, 2014 (Deposit Rules) wherein following are the key amendments relating to the return of deposits:

• Annual Return (Rule 16):Every company (other than a government company) should use form DPT-3 (return of deposits) to file:

1. A return of deposit; or

2. Particulars of transactions by a company not considered as deposit as per rule 2 (1) (c) of the Companies (Acceptance of Deposit) Rules, 2014; or

3. Both (If there are deposits as well as exempted deposits in the company)

This return should be filed with the Registrar of Companies (“ROC”) on or before 30^thJune, of every year (comprising information contained therein as on 31^stMarch of that year duly audited by the auditor of the company).

• One-time Return (Rule 16A):A one-time return is required to be filed by every company (other than a government company) with respect to the receipt of money or loan outstanding but not considered as deposits from 01^st April 2014 to 22^nd January 2019. Further, MCA vide its notification dated 12^th April 2019 (attached for your reference), change the period for the one-time return from 22^nd January 2019 to 31^st March 2019 (i.e. the information to be provided is from 01^st April 2014 to 31^st March 2019).

Please find the table below for compliances related to Rules 16 and 16A with timelines, for your understanding:

♦	Onetime Return for disclosure of details of outstanding money or loan received by a company but not considered as deposits in terms of rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014	Information pertaining from 01st April 2014 to 31st March 2019	To be filed by 29th June 2019
♦	Return of Deposits, an annual return (if any deposits persist)	Information pertaining as on 31st March 2019	To be filed by 30th June 2019
♦	An annual return for disclosure of transactions by a company not considered as deposit as per rule 2 (1) (c) of the Companies (Acceptance of Deposit) Rules, 2014	Information pertaining as on 31st March 2019	To be filed by 30th June 2019
♦	An annual return of deposit and particulars of transactions by a company not considered as deposit (If there are deposits as well as exempted deposits in the company)	Information pertaining as on 31st March 2019	To be filed by 30th June 2019

Q.1  What is meant by Deposit?

Ans. “Deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company but does not include such categories of amount [Provided in Rule 2(1)(c)] as may be prescribed in consultation with the RBI.

Q.2 What are the exempted deposits from Section 73 to 76 of the Companies Act, 2013?

Ans. The definition of deposit excludes certain transactions from its purview which are given in the Rule 2(1)(c) of the Companies (Acceptance of Deposit Rules), 2014. So, we need to look at Rule 2(1)(c) to see what are the exempted deposits for which this one- time DPT-3 is required.

Q.3 What all are those receipt ofmoney to be considered as exempted deposits?

Ans.  As per Rule 2 (1)(c) there are certain receipt of money or loan which are not considered as ‘deposits’ and accordingly exempt from the compliance of deposits as per the Act.

Accordingly, outstanding balances of all items fall under rule 2(1)(c) of deposit rules, particularly following are required to be reported by the companies:

1. any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government, or any amount received from a local authority, or any amount received from a statutory authority constituted under an Act of Parliament or a State Legislature ;

2. any amount received from foreign Governments, foreign or international banks, multilateral financial institutions (including, but not limited to, International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and International Bank for Industrial and Financial Reconstruction), foreign Governments owned development financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies corporate and foreign citizens, foreign authorities or persons resident outside India subject to the provisions of Foreign Exchange Management Act, 1999 (42 of 1999) and rules and regulations made there under;

3. any amount received as a loan or facility from any banking company or from the State Bank of India or any of its subsidiary banks or from a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949), or a corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or in clause (b) of section (2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) , or from a co-operative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934) ;

4. any amount received as a loan or financial assistance from Public Financial Institutions notified by the Central Government in this behalf in consultation with the Reserve Bank of India or any regional financial institutions or Insurance Companies or Scheduled Banks as defined in the Reserve Bank of India Act, 1934 (2 of 1934);

5. any amount received against issue of commercial paper or any other instruments issued in accordance with the guidelines or notification issued by the Reserve Bank of India;

6. any amount received by a company from any other company;

7. any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of the securities applied for;

Explanation- For the purposes of this sub-clause, it is hereby clarified that –

Without prejudice to any other liability or action, if the securities for which application money or advance for such securities was received cannot be allotted within sixty days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules.

[Provided that unless otherwise required under the Companies Act, 1956 (l of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules or regulations made thereunder to allot any share, stock, bond, or debenture within a specified period, if a company receives any amount by way of subscriptions to any shares, stock, bonds or debentures before the l^st April 2014 and disclosed in the balance sheet for the financial year ending on or before the 31^st March 2014 against which the allotment is pending on the 31^st March 2015, the company shall, by the l^st June 2015, either return such amounts to the persons from whom these were received or allot shares, stock, bonds or debentures or comply with these rules]

any adjustment of the amount for any other purpose shall not be treated as refund.

any amount received from a person who, at the time of the receipt of the amount, was a director of the company or a relative of the director of the Private company:

Provided that the director of the company or relative of the director of the private company, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report;”.

any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari-passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds or debentures compulsorily convertible into shares of the company within ⁶[Ten years]:

Provided that if such bonds or debentures are secured by the charge of any assets referred to in Schedule III of the Act, excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer;

ixa. “any amount raised by issue of non-convertible debenture not constituting a charge on the assets of the company and listed on a recognised stock exchange as per applicable regulations made by Securities and Exchange Board of India.”;]

1. any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit;

2. any non-interest-bearing amount received and held in trust;

3. any amount received in the course of, or for the purposes of, the business of the company,-

4. as an advance for the supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty-five days from the date of acceptance of such advance:

Provided that in case of any advance which is subject matter of any legal proceedings before any court of law, the said time limit of three hundred and sixty-five days shall not apply:

1. as advance, accounted for in any manner whatsoever, received in connection with [consideration for an immovable property] under an agreement or arrangement, provided that such advance is adjusted[against such property] in accordance with the terms of agreement or arrangement;

2. as security deposit for the performance of the contract for supply of goods or provision of services;

3. as advance received under long term projects for supply of capital goods except those covered under item (b) above:

4. as an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less;

5. as an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government;

6. as an advance for subscription towards publication, whether in print or in electronic to be adjusted against receipt of such publications]

Provided that if the amount received under items (a), (b) and (d) above becomes refundable (with or without interest) due to the reasons that the company accepting the money does not have necessary permission or approval, wherever required, to deal in the goods or properties or services for which the money is taken, then the amount received shall be deemed to be a deposit under these rules:

Explanation.- For the purposes of this sub-clause the amount shall be deemed to be deposits on the expiry of fifteen days from the date they become due for refund.

• any amount brought in by the promoters of the company by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a bank subject to fulfilment of the following conditions, namely:-

1. the loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance;

2. the loan is provided by the promoters themselves or by their relatives or by both; and

3. the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter;

• Any amount received by a Nidhi company in accordance with therules made under section 406 of the Act.
• Any amount received by way of subscription in respect of chitunder the Chit Funds Act, 1982(4 of 1982).
• Any amount received by company under any collective Investmentscheme in compliance with regulations framed by the Securities and Exchange Board of India.
• Any amount of twenty-five lakh rupees or more received by a startup company, by way of convertible note (convertible into equity shares or repayable within a period not exceeding fiveyears from the date of issue) in a single tranche, from a person.
• Any amount received by a company from –

(i) Alternate Investment Funds;

(ii) Domestic venture Capital Funds;

(iii) Infrastructure Investments Trusts;

(iv) Real Estate Investment Trusts;

(v) Mutual Funds registered with the Securities and Exchange Board of India

• NOTE: Any amount received from the Real Estate Investment Trusts registeredwith the Securities and Exchange Board of India does not get covered in the definition of Deposit under the Depositrules.

 Companies required to File FormDPT-3:

 All Companies are required to file Form DPT-3 whether:

• Small Company
• Private Company
• PublicCompany
• OPC etc.

Companies exempted from filing the FormDPT-3: 

Following Companies are exempted to file form DPT-3:

• BankingCompanies
• Non-Banking FinancialCompanies
• Housing FinanceCompanies
• Government Company

• What if a company doesn’t have any deposits or exempted deposits as on 31^st March 2019?

Such Companies are not required to file any return, even NIL return is not required.

• Return filing will be one time or every year?

DPT-3 is now annual compliance by all the companies which has exempted deposits also. Earlier, it was compulsory only for companies which have accepted deposits under Section 73 to 76 of the Companies Act, 2013.

According to new version of DPT-3, there are 4 purposes mentioned in point no. 3 of the said form:

1. Onetime Return for disclosure of details of outstanding money or loan received by a company but not considered as deposits

2. Return of Deposit

3. Particulars of transactions by a company not considered as deposit as per rule 2 (1) (c) of the Companies (Acceptance of Deposit) Rules, 2014

4. Return of Deposit and Particulars of transactions by a company not considered as deposit

Purpose 1: It is to be filed one time by companies having exempted deposits as per Rule 2(1)(c) of Deposit Rules by 29^th June 2019.

Purpose 2: It is an annual return of deposit and to be tick marked by companies having only deposit covered under Section 73 to 76 of the Companies Act, 2013. It is to be filed by 30^th June of every year.

Purpose 3: It is an annual return of exempted deposit and to be tick marked by companies having only exempted deposit covered under Rule 2(1)(c). It is to be filed by 30^th June of every year.

Purpose 4: It is a combined annual return of deposits as well as exempted deposits and to be tick marked by companies having both deposits under Sec 73 to 76 of the Companies Act, 2013 and exempted deposit covered under Rule 2(1)(c). It is to be filed by 30^th June of every year. 

S.NO.	Documents	Particulars
1.	Statutory Auditor’s certificate	Certified by Statutory Auditor of the Company
2.	Deposit Insurance contract	Mandatory if company has deposit insurance and details of same are mentioned in the form
3.	Copy of trust deed	Mandatory if company has trust deed and details of same are mentioned in the form
4.	Copy of instrument creating charge	Mandatory if company has  created charge and details of same are mentioned in the form
5.	List of depositors	List of deposits matured, cheques issued but not yet cleared to be shown separately – Mandatory if company has balance of deposits outstanding at the end of the year.
6.	Details of liquid assets
7.	Optional attachment, if any