CS Vinita Nair
A read through the provisions of Section 73 of the Companies Act, 2013 clearly states that the Companies can accept deposit from members and/or public on or after the commencement of the said Act i.e on or after 1st April, 2014, in accordance with provisions of Chapter V.
Reading of Section 73 (2) and 76 (1) clarifies that Companies (Acceptance of Deposit) Rules, 2014 also needs to be complied for accepting deposits under Act, 2013.
Rule 16 of The Companies (Acceptance of Deposit) Rules, 2014 (Deposit Rules), states that every Company to which this Rules apply, shall on or before 30th June of every year file with the Registrar, a return of deposit in Form DPT-3 along with fees and furnish information as on 31st March of that year duly audited by Auditor of the Company.
Thus, it is very clear position that DPT-3 is to be filed for deposits accepted on or after 1st April, 2014 in compliance with Chapter V of Act, 2014 and Deposit Rules.
Explanation to Rule 19 of Deposit Rules 2014 reflects an important point to note revolving the applicability of Form DPT-3 for “Earlier Deposits”. The said explanation entrusts on the companies to solely determine whether to continue with the deposits accepted by them under Companies Act, 1956.
It thereby states that all the deposits accepted by the companies under the Companies Act,1956 and where such companies decides not to repay such deposits within a period of one year from the commencement of the Companies Act,2013 or from the date on which such payments are due, whichever is earlier as is required under Clause(b) of sub-section (1) of Section 74, then by virtue of this explanation to Rule 19 of Deposit Rules it shall be incumbent on such companies to mandatorily comply with the following requirements pursuant to Section 73 of Act,2013 and the Deposit Rules namely:
a) Such company shall on or before the 30th day of April of each year deposit in a scheduled bank account an amount been not less than fifteen per cent. of the amount of its deposits maturing during a financial year and the subsequent financial year under the name “Deposit Repayment Reserve Account”. Further such account shall only be utilized for payment of deposit
b) Every such company shall enter into a deposit insurance contract. However, vide MCA Circular No. G.S.R. 386(E). dated 6th June, 2014 it has been expressly stated that companies may accept deposit without entering into deposit insurance contract till 31st March, 2015. Thus, the applicability of this circular may deem to extend to both the companies accepting fresh deposits under Act, 2013 as well as companies with “earlier deposits” who intend not to continue repaying such deposits based on original terms and conditions in view of explanation to Rule 19 of Deposit Rules.
c) Every such company shall provide adequate security by way of charge on its assets as referred to in Schedule III of the Act, 2013 excluding intangible assets of the company for the due repayment of the amount of deposit and interest thereon. It is also provided that such amount of security shall not exceed the market value of such assets as assessed by a registered valuer.
d) In connection with the creation of such security, every such company is also required to appoint a deposit trustee and execute a deposit trust deed in Form DPT-2 for the said purpose.
Section 74 deals with repayment of deposits accepted before commencement of Act, 2013. Section 74 (1) (a) stipulates the requirement to file Form DPT- 4 viz. Statement regarding deposit existing on the commencement of Act, 1956, within a period of 3 months from commencement (1st April, 2014) or from the date on which such payments are due.
In this case there seems to be a drafting error. The words ‘whichever is earlier’ as appearing in Section 74 (1) (b) is missing here.
However, Ministry’s clarification circular no. 27/2014 dated 30th June, 2014 extending the time limit for a period of 2 months without any additional fee rests the confusion arising from the above drafting.
Form DPT-4 necessitates giving details of deposits due as on the commencement of the Act i.e. 1st April, 2014 along with details of deposits and interest due but not paid, due but not claimed and deposits not due for repayment. Details of deposits due for repayment in next three months and arrangement made for repayment of deposits due for repayment also needs to be specified.
Attachments to Form DPT-4 includes:
1. Auditor’s certificate;
2. List of depositors indicating name, address, amount deposited, repaid during the year and outstanding, interest due, paid and payable as at the close of the Financial Year and separately indicating deposits not yet matured, matured, claimed and paid and matured, claimed but not paid and matured but not claimed for payment. List of deposits matured, cheques issued but not yet cleared to be shown separately.
The details required to be annexed is very much identical to the details required under to be given under Return of deposits.
Section 74 (1) (b) stipulates the requirement to repay all the deposits accepted prior to commencement of the Act by 31st March, 2015 or the payment due date whichever is earlier.
Further, the Company Law Board, on an application made by such Company and after considering the financial condition, the amount of deposit or part thereof and the interest payable thereon by the Company, may consider allowing further time as may be reasonable in view of the Company Law Board.
In view of the aforesaid, all the Companies which have accepted deposits prior to 1st April, 2014 are required to file Form DPT-4 as an attachment to Form GNL-2 in view of MCA Circular No. 09/2014 dated 25th April, 2014 read with MCA Circular No. 27/ 2014 dated 30th June, 2014 latest by 31st August, 2014 without any additional fees in terms of Section 403 of Companies Act, 2013. On reading of Section 74 (1) (b) it is quite clear that all existing deposits will be due for payment latest by 31st March, 2015 unless the Companies prefer complying with the Act, 2013 and Deposit Rules.
(Article was First Published on 23.06.2014 and Republished with amendments on 02.07.2014 in view of MCA Circular No. 27/ 2014 dated 30th June, 2014)
[The above post is contributed by CS Vinita Nair at Vinod Kothari & Co. They can be contacted at firstname.lastname@example.org ]