CS Dipanjali Nagpal

Update

The Ministry of Corporate Affairs has yet again revised the provisions relating to acceptance of deposits under the Act, 2013 with its notification dated September 19, 2017. The Companies (Acceptance of Deposits) Second Amendment Rules, 2017 substitutes the proviso to sub-rule (3) of rule 3 relating to acceptance of deposits by members and brings about insignificant changes in the return of deposits in Form DPT-3. The changes are discussed in detail herein below:

Proviso to Rule 3(3) of the Companies (Acceptance of Deposit) Rules, 2014

Exiting provision –

“Provided that a private company may accept from its members monies not exceeding one hundred per cent of aggregate of the paid up share capital, free reserves and securities premium account and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.”

Amended provision –

“Provided that a Specified IFSC Public company and a private company may accept from its members monies not exceeding one hundred per cent. of aggregate of the paid up share capital, free reserves and securities premium account and such company shall file the details of monies so accepted to the Registrar in Form DPT-3.

Explanation.—

For the purpose of this rule, a Specified IFSC Public company means an unlisted public company which is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Center located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006.

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Provided further that the maximum limit in respect of deposits to be accepted from members shall not apply to following classes of private companies, namely:—

(i) a private company which is a start-up, for five years from the date of its incorporation;

(ii) a private company which fulfills all of the following conditions, namely:—

Update

(a) which is not an associate or a subsidiary company of any other company;

(b) the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is less ; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73.

Provided also that all the companies accepting deposits shall file the details of monies so accepted to the Registrar in Form DPT-3.”

Key changes

  • Existing provisions of accepting monies not exceeding one hundred per cent. of aggregate of the paid up share capital, free reserves and securities premium account from its members extended to ISFC public companies. Details of deposits accepted by such companies required to be filed with the Registrar in Form DPT-3.
  • Specified ISFC public companies defined in detail as-

> “an unlisted public company which is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Center located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006;”

  • In order to align the provisions of the exemption notification dated June 13, 2017providing exemption from clauses (a) to (e) of the sub-section (2) of section 73 of the Act, 2013 limits on deposits from members shall not apply to the following private companies:-

> a private company which is a start-up, for five years from the date of its incorporation;

> a private company which fulfills all of the following conditions, namely:—

> which is not an associate or a subsidiary company of any other company;

  • the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is less ; and
  • such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73.

All such companies accepting deposits shall file the details of monies so accepted with the Registrar in Form DPT-3.

(Author is associated with Vinod Kothari & Company and can be reached at corplaw@vinodkothari.com)

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One response to “MCA liberalizes acceptance of deposits from members”

  1. Sandeep Parekh says:

    It means that now Private Limited company who fulfills all 3 conditions CAN raise money from its members without any limit. It seems advantage of old Companies Act 1956 in to new book!!

    Do you agree to this interpretation?

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