Deposits and Exempted Deposits

DEPOSITS AND EXEMPTED DEPOSITSAny company can accept amount from a person who is its director at the time of receipt of the amount out of his own funds or from the existing Directors. For this purpose, the director will have to submit a declaration with the Company that amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others. Such amount are not deposits as per Companies (Acceptance of Deposit) Rules, 2014.

However, consequent to amendment in Companies (Acceptance of Deposit) Rules 2014 amounts received from Directors out of their own funds are to be reported in Directors Report and to be in disclosed in Financial Statements.

Under Companies Act, 1956 only a private company could have received a loan from relatives of a director. However, under the Companies Act 2013 initially no company was allowed to receive any loan from relatives of its director.

Later Companies (Acceptance of Deposit) Rules 2014 was amended w.e.f. 15th September 2015 to allow private companies to accept amounts from relatives of a director out of their own funds. For this purpose, the relative will have to submit a declaration with the Company that amount is not being given out of funds acquired by them by borrowing or accepting loans or deposits from others. Such amounts are not deposits as per amended Companies (Acceptance of Deposit) Rules, 2014. It is pertinent to note that even after the amendment a public company cannot accept amounts from relatives of its directors.

Relatives for this purpose means:

  • Husband and wife;
  • Father (including step-father);
  • Mother (including step-mother);
  • Son (including step-son);
  • Son’s wife;
  • Daughter;
  • Daughter’s husband;
  • Brother (including step-brother); and
  • Sister (including step-sister).

Deposits from Members by Public Company and Private Companies prior to 5th June 2015

Subject to the passing of a resolution in general meeting and fulfilment of the specified conditions a company can take deposit from its members to the extent of 25% of paid up capital and free reserves (and securities premium account w.e.f. 15th September 2015)

Procedure / Compliance for accepting deposits from members can be summarised in the below table: –

Sl.

No.

Requirement For Private Companies which are covered under the Exemption Notification OTHER THAN PRIVATE COMPANIES
1 Resolution Ordinary    Resolution                   of

members required

Ordinary Resolution of members required
2 Form DPT-1 Not required Required – Issue a circular in Form DPT-1 to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form;

File a copy of the circular and statement with the Registrar within 30 days before the date of issue of the circular. Such circular has to be issued to members by registered post with acknowledgement due or speed post or by electronic mode.

Certificate of Statutory Auditor attached to DPT-1 that the company has not committed any default in the repayment of deposits accepted or payment of interest on such deposits and if there was a default then that the company had made good the default and a period of five years has lapsed since the date of making good the default as the case may be w.e.f. 15th August 2018, a certificate from Statutory Auditor is required as per 2nd Proviso to Rule 4(1) of Companies (Acceptance of Deposit) Rules 2014 as amended vide notification dated 5th July 2018 is to be attached along with DPT 1.

3 Deposit Trust Deed Not required Required – The company shall execute a deposit trust deed in Form DPT-2 at least seven days before issuing the circular in Form DPT-1.
4 Maintenance of Liquid Fund Not Required Required – Deposit sum which shall not be less than 15% of the deposits maturing during a financial year and the financial year next following and keep in a scheduled bank in a separate bank account to be called as deposit repayment reserve account. The limit has been revised to 20% of the deposits maturing during a financial year w.e.f. 15th August 2018 vide notification dated 5th July 2018.
5 Security Optional – In case of issue of secured deposits, provide security, way of a charge on its assets excluding intangible assets of the company for the repayment of the amount of deposit and interest thereon for an amount which shall not be less than the amount remaining unsecured by the deposit insurance Optional – In case of issue of secured deposits, provide security, way of a charge on its assets excluding intangible assets of the company for the repayment of the amount of deposit and interest thereon for an amount which shall not be less than the amount remaining unsecured by the deposit insurance
6 Deposit Insurance Not Required Not Required – The Company has to enter into a contract for providing deposit insurance at least 30 days before the issue of circular. However, w.e.f. 15th August 2018, deposit insurance is not required as Rule 5 has been omitted vide notification dated 5th July 2018.
7 Deposit Receipt Furnish receipt within 21 days of amount received to the depositors Furnish receipt within 21 days of amount received, to the depositors
8 Deposit Register Maintain deposit register and make entries within 7 days of issuance of receipt Maintain deposit register and make entries within 7 days of issuance of receipt
9 Duration    of Deposits A notice within a period of less than 6 months or more than 36 months from the date of acceptance or renewal of such deposit.

Exception – A company may, accept or renew such deposits subject to the condition that:

  • Such deposits shall not exceed 10% paid up share capital and free reserves (and securities premium account w.e.f. 15th September 2015) of the company, and
  • Such deposits are repayable not earlier than 3 months from the date of such deposits or renewal.
No company shall accept deposits from members which are repayable on demand or upon receiving a notice within a period of less than 6 months or more than 36 months from the date of acceptance or renewal of such deposit.

Exception – company may, accept or renew such deposits subject to the condition that:

  • Such deposits shall not exceed 10% paid up share capital and free reserves (and securities premium account w.e.f. 15th September 2015) of the company, and
  • Such deposits are repayable not earlier than 3 months from the date of such deposits or renewal.

In this regard, a Specified *IFSC Public company and a private company must meet the MCA Compliance :

IFSC: A Specified IFSC Public company i.e. an unlisted public company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Services Centre located in an approved multi services SEZ can accept from its members monies not exceeding 100% 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.

However, they must comply with provisions of Section 73(2) of Companies Act 2013 and Companies (Acceptance of Deposit) Rules 2014

  • File with the Registrar an annual return of deposits in Form DPT 3
  • Before the 30th day of June (as on 31st March) each year
  • The information therein should be audited by Statutory Auditor of the company

Conclusion: It is pertinent to note that every company accepting monies which are deposits or not deposits (exempted deposits) or both have to file annual return in Form DPT-3 by 30th June every year.

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