Summary: Under the Companies Act, 2013, loans received by a private limited company from its shareholders require careful classification for DPT-3 reporting. Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 operates on an exclusionary basis, treating receipts as deposits unless specifically exempted. Ordinary shareholder loans do not fall within the standard list of exempted borrowings. Although the MCA Exemption Notifications of 2015 and 2017 grant private companies procedural relief from certain requirements under Section 73(2), such loans do not become “exempted borrowings” and continue to retain their character as deposits for reporting purposes. Consequently, shareholder loans should be disclosed under Option 1 (Return of Deposit) or Option 3 (Both Return of Deposit and Particulars of transactions not considered as deposit) in Form DPT-3, accompanied by the required auditor’s certificate. Companies must also ensure that an ordinary resolution has been passed in a general meeting, statutory limits are monitored, and the specific capacity of a lender holding both shareholder and director positions is properly evaluated before determining the appropriate reporting treatment.
Frequently Asked Practitioner Question:
“If a Private Limited Company receives a loan from its shareholders, where do we show this in DPT-3, since there is no specific category regarding the same? Whether in loan from director (if shareholder is a director) or loan from other companies (if shareholder is an entity), or somewhere else?”
This problem regularly hits the desks of practicing corporate professionals, company secretaries, and chartered accountants. To answer the reporting question accurately, one must first address the absolute fundamental legal query beneath it:
Is a loan received from a shareholder categorized as an Exempted Borrowing or a Deemed Deposit under the Companies Act, 2013?
Once you establish the correct legal taxonomy under the Acceptance of Deposits rules, the reporting mechanism on the MCA21 webform becomes entirely clear.
1. The Legal Matrix: Is a Shareholder Loan a Deposit?
Under Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, the framework operates on an exclusionary logic. Any receipt of money by way of a loan, advance, or credit is a public deposit by default, unless it falls squarely into one of the specific exempted line-items listed within that rule.
If you read the standard exclusions listed in Rule 2(1)(c), a loan received from an ordinary shareholder or member is completely omitted. It is not part of the standard list of exempted borrowings.
The Role of the MCA Exemption Notifications (2015 & 2017)
To provide ease of doing business, the Ministry of Corporate Affairs (MCA) issued landmark Exemption Notifications dated June 05, 2015, and June 13, 2017. These notifications specify that the provisions of Section 73(2)(a) to (e) of the Act shall not apply to a Private Limited Company accepting loans from its members, provided the company meets specific statutory caps—most notably, that the funds do not exceed 100% of the aggregate of its Paid-up Share Capital + Free Reserves + Securities Premium Account (or if it is a certified Start-up, or satisfies certain banking leverage ratios).
Crucial Compliance Nuance: These notifications exempt private companies from the heavy structural procedures of public deposits (such as maintaining repayment reserves or insurance), but they DO NOT shift shareholder loans into the definition of ‘Exempted Borrowings’ under Rule 2(1)(c). Structurally, it remains a deposit that is simply granted procedural relief.
2. The Reporting Protocol: Where to File in Form DPT-3
Because shareholder loans do not qualify as an exempted transaction under Rule 2(1)(c), they cannot legally be reported under Option 2 (Particulars of transactions by a company not considered as deposit) on the DPT-3 webform. Misclassifying them there to evade an audit trail constitutes an incorrect filing.
- The Radio Button Selection: You must select either Option 1 (Return of Deposit) or Option 3 (Both Return of Deposit and Particulars of transactions not considered as deposit) based on whether the company has other parallel non-deposit liabilities.
- The Disclosures Column: The outstanding amount of the shareholder loan as of March 31st must be keyed entirely within the schedules designated for Deposits.
- Statutory Auditor Validation: Filing under Option 1 or Option 3 triggers a mandatory programmatic block requiring a formal Auditor’s Certificate to be securely annexed to the submission.
3. Critical Conditions Precedent Before Filing
Before signing off on Form DPT-3, practitioners must verify that the corporate actions taken during the execution of the loan were legally sound:
A. Mandatory General Meeting Resolution: A company cannot accept loans from shareholders through a simple Board Meeting. Under Section 73(2), passing an Ordinary Resolution in a properly convened General Meeting of the shareholders is a strict prerequisite before taking the funds.
B. Tracking the Aggregate Caps: Ensure the total value of loans from shareholders sits comfortably within 100% of the Net Worth metrics (Paid-up Capital + Reserves + Premium). Any unexempted amount exceeding this cap shifts the company into severe default status.
C. Resolving the ‘Dual Capacity’ Conundrum (Director + Shareholder): If an individual holds both shares and a directorship, evaluate the contract capacity. If they advanced the loan explicitly as a Director and executed the mandatory written declaration stating that the funds are personal and not borrowed from third parties, the loan is an Exempted Borrowing reportable under Option 2. If no such declaration exists or they advanced it strictly as a member, it falls back under Option 1 or 3 as a Deposit.
Conclusion: Do not try to fit shareholder loans into Option 2 just to escape an Auditor’s Certificate. Verify that your clients have passed the required General Meeting Ordinary Resolution, maintain strict controls over net-worth limits, and file under Option 1 or 3 as a Deemed Deposit to ensure completely pristine, bulletproof statutory compliance.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
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