[ As Updated till Companies (Acceptance of Deposits) Amendment Rules, 2019]
A] Brief Information :
Chapter V of the Companies Act, 2013 covering Section 73 to Section 76A deals with the Acceptance of Deposits by Companies.
Section 73(1) of the Companies Act, 2013 prohibits every company other than Banking Company & NBFC to accept deposits from public except in a manner provided under Chapter V.
Section 73(2) of the Companies Act, 2013 permits to accept deposits from the members of the company provided resolution is passed in general meeting to that effect & compliance of applicable provisions of the Companies (Acceptance of Deposits) Rules, 2014 subject to fulfillment all the conditions specified (from a to f) in the Section 73(2) .
The conditions specified ( from a to e ) under Section 73(2) shall not be applicable to below private companies –
A. which accepts from its members monies not exceeding one hundred per cent of aggregate of the paid up share capital, free reserves and securities premium account; or
B. which is a start-up, for five years from the date of its incorporation; or
C. which fulfills all of the following conditions, namely:-
Provided that the company referred to in clauses (A), (B) or (C) shall file the details of monies accepted to the Registrar in such manner as may be specified.”
B] Meaning of Deposit :
It is very important to understand the word Deposit which is defined in sub-rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 as amended by Companies (Acceptance of Deposits) Amendment Rules, 2019 –
“Deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include –
i. any amount received from the Central Government or a State Government or a Local Authority etc.
ii. any amount received from foreign Governments, foreign or international banks etc subject to FEMA provisions
iii. any amount received as a loan or facility from any banking company etc.
iv. any amount received as a loan or facility from public financial institution etc.
v. any amount received against issue of commercial paper etc as per RBI guidelines
vi. any amount received by a company from any other company
vii. any amount received and held towards subscription of any securities such as share application money etc –
> 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
> any adjustment of the amount for any other purpose shall not be treated as refund
viii. 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
ix. any amount raised by the issue of bonds or debenture etc
x. 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
xi. any non-interest bearing amount received and held in trust
xii. any amount received in the course of, or for the purposes of, the business of the company,-
a. 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
b. 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
c. as security deposit for the performance of the contract for supply of goods or provision of services
d. as advance received under long term projects for supply of capital goods except those covered under item (b) above
e. 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
f. as an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government
g. 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:
xiii. 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 fulfillment of the following conditions, namely:-
a. the loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance
b. the loan is provided by the promoters themselves or by their relatives or by both; and
c. the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter
xiv. any amount accepted by a Nidhi company in accordance with the rules made under section 406 of the Act
xv. any amount received by way of subscription in respect of a chit under the Chit Fund Act, 1982
xvi. any amount received by the company under any collective investment scheme in compliance with regulations framed by the Securities and Exchange Board of India
xvii. an amount of twenty five lakh rupees or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person –
> “start-up company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognised as such in accordance with notification number G.S.R. 180(E) dated 17th February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry
> “convertible note” means an instrument evidencing receipt of money initially as a debt, which is repayable at the option of the holder, or which is convertible into such number of equity shares of the start-up company upon occurrence of specified events and as per the other terms and conditions agreed to and indicated in the instrument.
xviii. any amount received by a company from Mutual Funds etc. registered with the Securities and Exchange Board of India in accordance with regulations made by it
C] Form DPT-3 :
i] Rule 16 of the Companies ( Acceptance of Deposits ) Rules says to file Return of Deposits by applicable companies in Form DPT-3 stating information as on 31-March of particular financial year duly audited by the auditor of the company.
A new explanation has been added via Companies (Acceptance of Deposits) Amendment Rules, 2019 which says that Form DPT-3 shall be used for filing return of deposit or particulars of transaction not considered as deposit or both by every company other than Government company.
Form DPT-3 needs to be filed on or before 30th June from the end of the respective financial year.
Thus henceforth every company other than government company shall file Form DPT-3 annually on or before 30th June from the end of the respective financial year to report even particulars of transaction not considered as deposit.
ii] Rule 16A deals with disclosures of deposits in the financial statement. Rule 16A(1) states that Every company, other than a private company, shall disclose in its financial statement, by way of notes, about the money received from the director. As per Rule 16(2), Every private company shall disclose in its financial statement, by way of notes, about the money received from the directors, or relatives of directors.
A new sub rule 3 has been added to Rule 16A via Companies (Acceptance of Deposits) Amendment Rules, 2019 which says that every company other than Government company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in terms of clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to the date of publication of this notification in the Official Gazette ( 22-Jan-2019 ), as specified in Form DPT-3 within ninety days from the date of said publication of this notification ( 22-April-2019 ) along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.
Thus, Form DPT-3 needs to be filed onetime by every company other than Government Company which has outstanding loan as on 22nd January, 2019 which was not considered as deposits , in terms of Rule 2(1)(c) as stated above.
Even though due care has been taken to ensure the accuracy, completeness and reliability of the information provided, users of this information are expected to refer to the relevant existing provisions of applicable laws & to seek advice of their consultants. The user of the information agrees that the information is not a professional advice & we assume no responsibility for the consequences of use of such information.
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