The Companies Act, 2013 by way of Section 73 to 76 has bought many changes in respect to acceptance of Deposits by any Company, including Private Limited Company.
What is considered as ‘Deposit’?
The following will be included in the definition of Deposit:
- Any amount received against subscription to any securities including share application money provided the securities are not allotted within 60 days from the date of receipt of the application money or advance and money has not been refunded in 15 days.
- Any amount received from Director of the company, if does not furnish a declaration that the amount given is not out of borrowed funds.
- Any amount received from an employee of the company exceeding his annual salary in the nature of interest bearing security.
- Any amount received in the course of or the purpose of the business for the following :-
- As advance for the supply of goods or provision of services, provided such advance is appropriated against supply of goods or provision of service within 365 days from the receipt of such amount,
- As advance received in connection with consideration for property under an agreement or arrangement,
- As security deposit for the performance of the contract for supply of goods or provision of services,
- As advance received under long term projects for supply of capital goods,
if any amount received above becomes refundable, then such amount received shall be deemed to be a deposit after the expiry of 15 days from the date it became due for refund.
Who can give Deposit?
A Public Company having net worth of Rs. 100 crores or more or turnover of Rs. 500 crores or more, can accept deposit from General Public subject to prior consent of Shareholders in General Meeting.
A Private Company can accept deposits from its members subject to passing of Special Resolution by the members in General Meeting and compliance with provisions of Section 73 of New Companies Act, 2013 read with Companies (Terms and Conditions of acceptance of Deposit) Rules, 2014.
Further, Private Companies can also accept Deposit from Directors. However, Director has to furnish declaration at the time of deposit being given to the company that the amount is not being given out of the funds acquired by him by borrowing or accepting loans or deposits from others.
What is the time period to refund the Deposit which has been accepted prior to 01st April, 2014?
Considering the provisions of Section 74 of the Companies Act, 2013, any Deposit accepted prior to 01st April, 2014, are liable to be repaid by the Private Companies within a period of one year from 01st April, 2014 or repayment date, whichever is earlier.
Perhaps the most critical issue remains unresolved is about the deposits taken prior to the implementation of the definitions of Private Company under The Company Act, 2013 as given under Section 2(68), whether the deposits accepted from Members/ Director and their relatives would be excluded from Shareholders approval or not.
All monies received by the Private Company and non-eligible Public Company, prior to commencement of Companies Act, 2013, which comes under the ambit of “Deposit” due to change in definition of “Deposit”, shall file a statement of all the deposits accepted by the company in Form DPT-4, within a period of three months from the 01st April, 2014. Refer MCA General Circular No. 27/2014 for clarification regarding the filing of DPT-4 with Ministry of Corporate Affairs.
In addition to this, all above Deposits shall be refunded within a period of one year i.e. 01st April, 2015, or their repayment dates, whichever is earlier. It should be noted herewith that filing of DPT-4 does not dispense the requirement of repayment of Deposit within one year.
Hope the above information provides an insight of the compliances which are required to be complied by the Company in respect to acceptance of Deposits.
You may get back to us for any more details on above provisions or any other matter related to Companies Act, 2013 at below mentioned contact details-
Malavika Bhatia | <malavika.bhatia@bluelotusstrategy.com>
Monika Bhardwaj | <monika.bhardwaj@bluelotusstrategy.com>
Visit: http://www.bluelotusstrategy.com/blog/ and signup to receive our blogs when they get published.
