Acceptance of Public Deposits Critical Aspects REGULATORY FRAMEWORK - - PowerPoint PPT Presentation

Acceptance of Public Deposits Critical Aspects

REGULATORY FRAMEWORK FOR PUBLIC DEPOSITS AS PER COMPANIES ACT 2013 Chapter V: Acceptance of Deposits by Companies Section 2(31): Definition of Deposits. Section 73: Prohibition on acceptance of Deposits from Public Section 74: Repayment of Deposits, etc. accepted before commencement of this Act Section 75: Damages for Fraud Section 76: Acceptance of deposits from Public by certain Companies Section 76A: Punishment for contravention of section 73 or section 76

• The Companies (Acceptance of Deposits) Rules, 2014

Deposits – As per Section 2(31) of the Companies Act, 2013

“Deposit” includes any receipt of money by way of deposit or loan or in

any other form by a Company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India.

Amounts exempted from Deposits

• Any share application money accepted under this Act shall be treated as Deposit if

allotment is not made within 60 days.

• Customers Advances if not appropriated within 365 days shall be deposit.
• Convertible Bond or debentures with conversion period of more than 10 years are

deemed deposit.

• Any amount received by a company from any other company shall not be treated as

Deposits.

• Any amount received from the Government/ Authority shall not be treated as Deposits.

• 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 shall not be treated as Deposit.

• Any amount received from an employee of the company exceeding his annual salary

with the company shall be treated as Deposit.

• An amount of Rs. 25 lacs 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 shall not be treated as Deposit.

• Any amount received as a loan from any Banking Company/ S.B.I/ P.F.I/ Insurance

Companies/ Schedule Banks shall not be treated as Deposits.

Amounts exempted from Deposits

From whom Deposits can be accepted?? Eligible Company Non-Eligible Public Company Private Company From any member From Public

* Eligible Companies are Public Companies having net worth of at least INR 100 crore or turnover of at least INR 500 crore and are allowed to raise deposits from the persons other than its members

Limit on Acceptance of Deposits

C O M P A N I E S DEPOSITS

Deposits From Public From Members By Eligible Companies 25% of paid-up capital, free reserves and securities premium account. 10% of paid-up capital, free reserves and securities premium account By Public Company (Non-eligible Company)

• 35% of paid-up capital,

free reserves and securities premium account By Private Company

• 100% of paid-up capital,

free reserves and securities premium account By Government Company 35% of paid-up capital, free reserves and securities premium account

Period for Accepting Deposits

* A company may, for the purpose of meeting its short term requirement, accept the deposits for repayment earlier than 6 months, but not earlier than 3 months & such deposits shall not exceed 10 %

• f paid-up share capital, free reserves & security

premium account.

No Company shall accept any deposit which is repayable within a period of :- Less than 6 months More than 36 months OR

Non-Applicability of Public Deposits Rules

• n certain Companies

Non- Applicability

• f Deposit

Rules Banking Company NBFC Housing Finance Company registered with NHB

RESOLUTIONS REQUIRED

• By Eligible Companies

Special Resolution

• By Non-eligible Public Companies
• By Private Companies

Ordinary Resolution

Important Compliances

Issuance of Circular to all its members by registered post or speed post or by electronic mode in Form DPT-1 Filing a copy of the Circular with ROC within 30 days before the date of issuance of the Circular. Not applicable on private company

Mandatory Appointment of one or more Deposit Trustees for creating security for the Deposits (in the event of inviting secured deposits) by executing Trust Deed as prescribed in terms of Form DPT-2 within 7 days before issuing the advertisement inviting Deposits.

Deposit Repayment Reserve Account

As per Section 73 (2) (c) of the Companies Act, 2013 read with Rule 13 of the Companies (Acceptance of Deposits) Rules, 2014, a deposit of not less than 15%

• f the amount of its deposits maturing during the Financial Year and the next

following financial year is required to be maintained with scheduled commercial bank in a separate bank account to be called as Deposit Repayment

Reserve Account on or before the 30th day of April of each year.

For Example: If the Company came out with the Deposit Issue of Rs. 50 Crores wherein Deposits amounting to Rs. 12 Crores are to be redeemed during the current financial year and Rs. 20 Crores are proposed to be redeemed in the next financial year, then the Company is required to deposit Rs. 4.80 Crores (15% of 32 Crores)

Note- this provision is not applicable on private company

Important Filing

Every eligible company shall

* Furnishing of Return with ROC in Form DPT-3 on or before 30th June of every year for the period ended 31st March as per the information duly audited by the Auditor.

• btain, at least once in a year, credit rating for deposits

accepted by it and a copy of the rating shall be sent to the Registrar of Companies along with the return of deposits in Form DPT-3.

Penal Provisions

• Penal Rate of Interest: 18% per annum for the overdue period in case of deposits,

whether secured or unsecured, matured and claimed but remaining unpaid.

• Punishment for Contravention: Company & every officer of the Company who is in

default shall be punishable with fine which may extend to Rs. 5000 and where the contravention is a continuing one, with a further fine which may extend to Rs. 500 for every day after the first day during which the contravention continues.

8/31/2016

Corporate Professionals Capital Private Limited

D-28, South Extension –I, New Delhi-110 049 Ph: +91.11.40622200; Fax: +91.11.40622201; E: pkvijay@indiacp.com

Pavan Kumar Vijay

Thank You