Committees
and Policies
Companies Act 2013 and the
Respective Rules
Friday, 8 August 2014
Thursday, 31 July 2014
Loans & Investments by Co under Sec 186 of Cos Act 2013
LOANS
AND INVESTMENT BY COMPANY –SEC.186
Investment by company:
A company shall unless otherwise prescribed,
make investment through not more than
two layers of investment companies except – if ;
(i)
a company from acquires any other company incorporated in a country outside
India if such other company has investment subsidiaries beyond two layers as
per the laws of such country;
(ii)
a subsidiary company has any investment
subsidiary for the purposes of meeting the requirements under any law or under
any rule or regulation framed under any law for the time being in force.
Activities Covered:
·
giving any loan to any person or other body corporate;
·
giving any guarantee or provide security in
connection with a loan to any other
body
corporate or person; and
·
acquiring by way of subscription, purchase or
otherwise, the securities of any
other body corporate.
Limits:
The
aggregate of activities, which are made directly or indirectly by the company,
should not exceed the limit of –
|
60%
of its paid-up share capital, free reserves and securities premium account
or
100
% of its free reserves and securities premium account,
Whichever is more
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Approval by Special Resolution:.
Where the aggregate of
the loans and investment so far made, the amount for which guarantee or
security so far provided to or in all other bodies corporate along with the
investment, loan, guarantee or security proposed to be made or given by the
Board, exceed the limits specified under section 186 no
investment or loan shall be made or guarantee shall be given or security shall
be provided unless previously authorised by a special resolution passed in a
general meeting.
The
company has to pass the special resolution within one year from the date of
notification of this section.(i.e.,on
or before 31st March,2015)
A resolution passed at a
general meeting to give any loan or guarantee or investment or providing any
security or the acquisition shall specify
the total amount up to which the Board of Directors are authorised to give such
loan or guarantee, to provide such security or make such acquisition
Exceptions:
Prior
approval by means of Special Resolution passed at a general meeting is not
required – if
·
a loan or guarantee is given or where a
security has been provided by a company to its wholly owned subsidiary (WOS)
company or a joint venture (JV) company, or
·
acquisition is made by a holding
company, by way of subscription, purchase or otherwise of, the securities of
its WOS company
Disclose in Financial Statement:
The
company shall disclose to the members in the financial statement the full particulars
of the loans given, investment made or guarantee given or security provided and
the purpose for which the loan or guarantee or security is proposed to be
utilised by the recipient of the loan or guarantee or security.
Approval of PFI:
An
investment shall be made or loan or guarantee or security given by the company
only
after
the resolution sanctioning it is passed
at a meeting of the Board with the consent of
all the directors present at the meeting.
If
any term loan is subsisting in a company, prior approval of the Public Financial
Institution (PFI) concerned is also
required for making any investment, loan, guarantee or security.
Exceptions:
·
Where the aggregate of the loans and
investments so far made, the amount for which guarantee or security so far
provided to or in all other bodies corporate, along with the investments, loans,
guarantee or security proposed to be made or given does not exceed the 60% of its paid-up share capital, free
reserves and securities premium account or
100 % of its free reserves and securities premium account, Whichever is more; and
·
There is no default in repayment of loan
instalments or payment of interest thereon as per the terms and conditions of
such loan to the public financial institution.
Inter-Corporate loans/Deposits:
Companies
which are registered under section 12 of
the SEBI Act, 1992 and covered under such class or classes of companies as may
be prescribed, shall not take
inter-corporate loan or deposits exceeding the prescribed limit and such
company shall furnish in its financial statement the details of the loan or
deposits.
Rate of Interest:
No
loan shall be given under this section at a rate of interest lower than the prevailing
yield of one year, three year, five year or ten year Government Security
closest to the tenor of the loan.
No company
which is in default in the repayment of any deposits accepted before or after
the commencement of this Act or in payment of interest thereon, shall give any
loan or give any guarantee or provide any security or make an acquisition till
such default is subsisting.
Register of
Loans, Investments, Guarantee or Security :
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Form
|
Every company giving
loan or giving guarantee or providing security or making an acquisition of
securities shall, from the date of its
incorporation, maintain a register
in Form MBP 2 (w.e.f 1st
April, 2014) and enter therein separately, the particulars of loans and
guarantees given, securities provided and acquisitions made as aforesaid
|
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Entries
in the Register
|
The entries in the register shall be made chronologically in respect of each
such transaction within 7 days of
making such loan or giving guarantee or providing security or making
acquisition
|
|
Place
of Keeping
|
The
register shall be kept at the
registered office of the company and the register shall be preserved permanently and shall be kept in the custody of the company
secretary of the company or any
other person authorised by the Board for the purpose.
|
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Authentication
|
The entries in the
register (either manual or electronic) shall be authenticated by the company secretary of the company or by any other person authorised by the Board
for the purpose
|
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Maintenance
|
The register can be
maintained either manually or in
electronic mode.
|
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Inspection
|
The register shall be open to inspection at registered office of the company
|
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Extract
from Register
|
The extracts from the register may
be furnished to any member of the company on payment of such fee as may be
prescribed in the Articles of the company which shall not exceed Rs.10/- for each page
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Companies/ Transactions Exempted:
This
section shall not apply –
·
to a loan made, guarantee given or security
provided by a banking company or an insurance
company or a housing finance company
in the ordinary course of its business or a company engaged in the business of financing of companies or
of providing infrastructural facilities;
·
to any acquisition made by a non-banking
financial company registered under Chapter IIIB of the Reserve Bank of
India Act, 1934 and whose principal business is acquisition of securities in
respect of its investment and lending activities;
·
to any acquisition made by a company whose
principal business is the acquisition of securities;
·
to any acquisition of shares allotted in pursuance of section 62(1)(a).(Further
Issue of Capital)
“business of financing of companies” shall include, with regard to
a Non-Banking Financial Company registered with Reserve Bank of India,
“business of giving of any loan to a person or providing any guaranty or
security for due repayment of any loan availed by any person in the ordinary
course of its business”.
investment
company” means a company whose principal business is the acquisition of shares,
debentures or other securities;
“infrastructure
facilities” means the facilities specified in Schedule VI.
Penalty:
|
Company
|
Fine of Rs.25,000/- to Rs.5,00,000
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Officer
|
Imprisonment up to 2 years and
Fine of Rs.25,000/- to Rs.1,00,000/-
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Companies
Act,1956 Vs Companies Act,2013:
|
S.No
|
Cos
Act,1956
|
Cos
Act,2013
|
|
1
|
The limit prescribed was 60 % of Paid-up
share capital and Free Reserve or 100 % of Free Reserves whichever is more.
|
The limit prescribed is 60% of its paid-up share capital, free
reserves and securities premium account or
100 % of its free reserves and securities premium account, Whichever is more
|
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2
|
Rate of interest should be in respect of
bank rate under RBI Act.
|
Rate of interest should be in respect of
dated government security.
|
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3
|
Loans or investments by holding company to
its WOS company were exempted.
|
There is no exemption for these
loans/investments.
|
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4
|
Private Companies were totally exempted
from the provisions of Section 372A.
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Even Private companies will be subject to
strict compliance.
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5
|
One could escape from the punishment of
imprisonment by fully repaying the inter-corporate loan contravening sec.372A
q
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This is not possible
|
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6
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For the purpose of Sec.372A, loan includes
debentures.
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This is not so under Sec.186.
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By
M.Kurthalanathan B.Com,ACS,MBL
Practising Company Secretary
Friday, 18 July 2014
Deposits under Companies Act 2013
PROHIBITION ON ACCEPTANCE OF DEPOSITS FROM PUBLIC-
SEC.73
No
company shall invite, accept or renew deposits under this Act from the public
except in a manner provided under this Chapter.
Exemption:
It
shall apply to a company other than;
·
a Banking Company
·
a NBFC as defined in the RBI Act,1934 registered with the RBI
·
a Housing finance company registered with the
National Housing Bank established under the National Housing Bank Act,1987
·
a Company specified by the Central government
A
company may, subject to the passing of a
resolution in general meeting and subject to Companies (Acceptance of
Deposit)rules,2014 in consultation with the Reserve Bank of India, accept
deposits from its members on such terms and conditions, including the provision
of security, if any, or for the repayment of such deposits with interest, as
may be agreed upon
between
the company and its members.
Conditions:
(a)
issuance of a circular 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.
(b)
filing a copy of the circular along with
such statement with the Registrar within 30 days before the date of issue
of the circular;
(c)
depositing such sum which shall not
be less than 15% of the amount of its
deposits maturing during a financial year and the financial year next following,
and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;
(d)
providing deposit
insurance
(e)
certifying that the company has not
committed any default in the repayment of deposits accepted either before
or after the commencement of this Act or payment of interest on such deposits;
and
(f)
providing security, if any for the due repayment of the amount of
deposit or the interest thereon including the creation of such charge on
the property or assets of the company:
In case where a company does not secure
the deposits or secures such deposits partially, then, the deposits shall be
termed as ‘‘unsecured deposits’’ and
shall be so quoted in every circular,
form, advertisement or in any document related to invitation or acceptance
of deposits.
Apply to Tribunal:
Every
deposit accepted by a company shall be repaid with interest in accordance with
the terms and conditions of the agreement.
Where
a company fails to repay the deposit or part thereof or any interest thereon the
depositor concerned may apply to the
Tribunal for an order directing the company to pay the sum due or for
any loss or damage incurred by
him as a result of such non-payment and for such other orders as the Tribunal
may deem fit.
Terms and
conditions of acceptance of deposits by companies:
SNo
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Company
|
Terms & Conditions
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1
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No company referred to section 73(2) and no eligible company shall accept
or renew any deposit, whether secured or unsecured, which is repayable
on demand or upon receiving a notice within a period
of less than six months or more than thirty-six months from the date
of acceptance or renewal of such deposit.
For the purpose of meeting any of its short-term requirements of
funds, a company may accept or renew such deposits for repayment earlier
than six months from the date of deposit or renewal, as the case may
be,
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·
Deposits shall
not exceed 10% of the aggregate of the
paid up share capital and free reserves of the company, and
·
Deposits are repayable not earlier than three
months from the date of such deposits or renewal thereof.
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2
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No company referred to section 73(2) shall accept or renew any deposit
from its members.
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If the amount of such deposits together with the amount of other deposits
outstanding as on the date of acceptance or renewal of such deposit exceeds
25%. of the aggregate of the paid-up
share capital and free reserves of the company
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3
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(a) No
eligible company shall accept or renew any deposit from its members
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If the amount of such deposit together with the amount of deposits
outstanding as on the date of acceptance or renewal of such deposits from
members exceeds 10% of the aggregate
of the paid-up share capital and free reserves of the company;
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(b) No eligible company shall accept or renew any other deposit
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If the amount of such deposit together with the amount of such other deposits,
other than the deposit referred to in clause (a), outstanding on the date of
acceptance or renewal exceeds 25% of aggregate of the paid-up share capital
and free reserves of the company
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4
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No Government company eligible to accept deposits under section 76
shall accept or renew any deposit
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If the amount of such deposits together with the amount of other
deposits outstanding as on the date of acceptance or renewal exceeds 35% of the aggregate of its paid up share
capital and free reserves of the company
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5
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No company referred to section
73(2) or any eligible company shall invite or accept or renew any deposit in
any form.
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carrying a rate of interest
or pay brokerage thereon at a rate
exceeding the maximum RoI or brokerage
prescribed by the RBI for acceptance of deposits by NBFCs
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Where depositors so desire, deposits may be accepted
in joint names not exceeding three, with or without any of the clauses, namely,
“Jointly”, “Either or Survivor”, “First named or Survivor”, “Anyone or Survivor”.
.
The
person who is authorised, in writing, by a company to solicit deposits on its
behalf and through whom deposits are actually procured shall only be entitled
to the brokerage and payment of brokerage to any other person for procuring
deposits shall be deemed to be in violation of these rules.
The company shall not reserve to itself either
directly or indirectly a right to alter, to the prejudice or disadvantage of
the depositor, any of the terms and conditions of the deposit, deposit trust
deed and deposit insurance contract after circular or circular in the form of
advertisement is issued and deposits are accepted.
Form and particulars of advertisements or
circulars.-
Issue
circular:
Every company referred to section 73(2) intending to invite deposit from
its members shall issue a circular to all its members by registered post with
acknowledgement due or speed post or by electronic mode in Form DPT-1
Publish Circular:
The circular may be published in
English language in an English newspaper
and in vernacular language in a vernacular
newspaper having wide circulation in the State in which the registered
office of the company is situated.
Every eligible company intending to invite deposits shall issue a
circular in the form of an advertisement in Form DPT-1 for the purpose
in English language in an English newspaper and in vernacular language in one
vernacular newspaper having wide circulation in the State in which the
registered office of the company is situated.
Upload copy of Circular:
Every
company inviting deposits from the public shall upload a copy of the circular on its website, if any.
File copy of Circular with
Registrar:
No company shall issue or allow any
other person to issue or cause to be issued on its behalf, any circular or a
circular in the form of advertisement inviting deposits, unless such circular
or circular in the form of advertisement is issued on the authority and in the name of the Board of directors of the company.
No circular or a circular in the
form of advertisement shall be issued by or on behalf of a company unless, not
less than thirty days before the date of
such issue, there has been delivered
to the Registrar for registration a copy thereof signed by a majority of
the directors of the company as constituted at the time the Board approved the
circular or circular in the form of advertisement, or their agents, duly
authorised by them in writing.
Validity
of Circular:
A
circular or circular in the form of advertisement issued shall be valid until-
·
the
expiry of six months from the date of
closure of the financial year in which it is issued or
·
the
date on which the financial statement is laid before the company in AGM
or,
·
where
the AGM for any year has not been held, the latest day on which that meeting should have been held in
accordance with the provisions of the Act, whichever
is earlier and
A fresh circular or
circular in the form of advertisement shall be issued, in each succeeding
financial year, for inviting deposits during that financial year.
The date of the issue of the
newspaper in which the advertisement appears shall be taken as the date of
issue of the advertisement and the effective date of issue of circular shall be
the date of dispatch of the circular
Manner and extent of deposit insurance:
Enter
into Deposit Insurance Contract:
Every company referred to section 73(2)
and every other eligible company inviting deposits shall enter into a contract
for providing deposit insurance at least 30
days before the issue of circular or advertisement or at least thirty days before the date of
renewal, as the case may be.
The
amount as specified in the deposit insurance contract shall be deemed to be the
amount in respect of both principal amount and interest due thereon.
The Companies may accept the deposits without deposit
insurance contract till the
31st
March 2015
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Details of Deposit Insurance Contract (DIC):
The deposit insurance contract shall
specifically provide that in case the company defaults in repayment of
principal amount and interest thereon, the depositor shall be entitled to the
repayment of principal amount of
deposits and the interest thereon by the insurer up to the aggregate monetary ceiling as specified
in the contract.
In the case of
any deposit and interest not exceeding Rs.20,000/-
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The DIC shall
provide for payment of the full amount of the deposit and interest
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In the case of
any deposit and the interest thereon in excess of Rs.20,000/-
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The DIC shall
provide for payment of an amount not less than Rs.20,000/-for each depositor
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The amount of insurance premium paid on the insurance of such deposits shall be borne by the company itself
and shall not be recovered from the
depositors by deducting the same from the principal amount or interest
payable thereon.
Default in Deposit
Insurance Contract:
If any default is made by the
company in complying with the terms and conditions of the deposit insurance
contract which makes the insurance cover ineffective-
·
the
company shall either rectify the default
immediately or
·
enter
into a fresh contract within thirty days and
In case of
non-compliance-
·
the
amount of deposits covered under the deposit insurance contract and interest
payable thereon shall be repaid within
the next fifteen days and
·
if
such a company does not repay the amount
of deposits within said fifteen days it shall pay 15% interest per annum for the
period of delay and shall be treated as having defaulted and shall be liable to
be punished in accordance with the provisions of the Act.
Creation of security:
Charge
on assets:
Every company referred to section 73(2)
and every eligible company inviting
secured deposits shall provide for security
by way of a charge on its assets as referred to in Schedule III of the Act excluding intangible assets of the company for
the due 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
Assessment by
Registered valuer:
In the case of deposits which are
secured by the charge on the assets referred to in Schedule III of the Act
excluding intangible assets, the amount of such deposits and the interest
payable thereon shall not exceed the market value of such assets as assessed by
a registered valuer.
The company shall ensure that the
total value of the security either by way of deposit insurance or by way of charge
or by both on company’s assets shall
not be less than the amount of deposits
accepted and the interest payable thereon.
For the purposes of proviso to sub-clause (ix)
of clause (c) of sub-rule (1) of rule 2 and this sub-rule, it is hereby
clarified that pending notification of sub-section (1) of section 247 of the
Act and finalisation of qualifications and experience of valuers, valuation of
stocks, shares, debentures, securities etc. shall be conducted by an independent merchant banker who is
registered with the SEBI or an independent
chartered accountant in practice having a minimum experience of ten years.
Security for Deposits:
The
security (not being in the nature of a pledge) for deposits shall be created in
favour of a trustee for the depositors on:
·
specific movable property of the company,
or
·
specific
immovable property of the company wherever situated, or any interest therein
Appointment of trustee
for depositors
No company referred to section 73(2)
or any eligible company shall issue a circular or advertisement inviting
secured deposits unless the company has appointed
one or more trustees for depositors for creating security for the deposits.
Obtain written consent
A written consent shall be obtained
from the trustee for depositors
before their appointment and a statement shall appear in the circular or
circular in the form of advertisement with reasonable prominence to the effect
that the trustees for depositors have given their consent to the company to be
so appointed.
Execute Deposit Trust Deed:
The
company shall execute a deposit trust deed in Form DPT-2 at least seven days before issuing the circular or circular
in the form of advertisement.
Appointment of Trustee:
No person including a company that is in the
business of providing trusteeship services shall be appointed as a trustee for
the depositors, if the proposed trustee –
(a)
is a director, key KMP or any other officer or an employee of the company or of
its holding, subsidiary or associate company or a depositor in the company;
(b)
is indebted to the company, or its subsidiary or its holding or associate
company or a subsidiary of such holding company;
(c)
has any material pecuniary relationship with the company;
(d)
has entered into any guarantee arrangement in respect of principal debts
secured by the deposits or interest thereon;
(e)
is related to any person specified in clause (a) above.
Removal
of Trustee;
No trustee for depositors shall be
removed from office after the issue of circular or advertisement and before the
expiry of his term except with the consent of all the directors present at a
meeting of the board.
In case the company is required to
have independent directors, at least one independent director shall be present
in such meeting of the Board.
Duties
of trustees.:
It
shall be the duty of every trustee for depositors to-
(a) ensure that the assets of the company on which charge is
created together with the amount of
deposit insurance are sufficient to cover the repayment of the principal amount
of secured deposits outstanding and interest accrued thereon;
(b) satisfy himself that the circular or advertisement inviting deposits does
not contain any information which is inconsistent with the terms of the deposit
scheme or with the trust deed and
is in compliance with the rules and
provisions of the Act;
(c)
ensure that the company does not commit any breach of covenants and provisions of the trust deed;
(d)
take such reasonable steps as may be necessary to procure a remedy for any breach of
covenants of the trust deed or the terms of invitation of deposits;
(e)
take steps to call a meeting of the holders of depositors as and when such
meeting is required to be held;
(f) supervise the implementation of the
conditions regarding creation of security for deposits and the terms of
deposit insurance;
(g) do such
acts as are necessary in the event the security
becomes enforceable;
(h)
carry out such acts as are necessary for the
protection of the interest of depositors and to resolve their grievances
Meeting of depositors:
The
trustee for depositors shall call a meeting of all the depositors on-
(a)
requisition
in writing signed by at least one-tenth of the depositors in
value for the time being outstanding;
(b)
the
happening of any event, which constitutes a default or which, in the
opinion of the trustee for depositors, affects the interest of the depositors
Form of application for deposits:
No company shall accept, or renew
any deposit, whether secured or unsecured, unless an application, in such form
as specified by the company, is submitted by the intending depositor for the
acceptance of such deposit.
The form of application shall
contain a declaration by the intending depositor to the effect that the deposit
is not being made out of any money borrowed by him from any other person.
Power to nominate:
Every depositor may, at any time, nominate
any person to whom his deposits shall vest in the event of his death and the
provisions of section 72 shall, as far as may be, apply to the nomination made
under this rule.
Furnishing of deposit receipts to
depositors.-
Every
company shall, on the acceptance or renewal of a deposit, furnish to the
depositor or his agent a receipt for the amount received by the company, within a period of twenty one days from the
date of receipt of money or realisation
of cheque or date of renewal.
The receipt shall –
·
be signed by an officer of the company duly authorised by the Board in this
behalf and
·
state the
date of deposit,
·
the name
and address of the depositor,
·
the
amount received by the company as deposit,
·
the rate
of interest payable thereon and the date on which the deposit is repayable.
Maintenance of liquid assets and creation
of deposit repayment reserve account.
Every company referred to section 73
(2) and every eligible company shall on
or before the 30th day of April of
each year deposit the sum which
shall not be less than 15 % of the
amount of its deposits maturing during a financial year and the financial
year next following, with any scheduled bank in a separate bank account to be
called as “deposit repayment reserve
account” and the amount so deposited shall not be utilised for any purpose
other than for the repayment of deposits.
The amount remaining deposited shall not at any time fall below fifteen
per cent. of the amount of deposits maturing, until the end of the current
financial year and the next financial year.
Registers
of deposits.
Every company accepting deposits shall
maintain at its registered office one or more separate registers for deposits
accepted or renewed, in which there shall be entered separately in the case of
each depositor the following particulars;
Particulars
of deposits:
(a)
name, address and PAN of the depositor/s;
(b)
particulars of guardian, in case of a minor;
(c) particulars of the nominee;
(d)
deposit receipt number;
(e)
date and the amount of each deposit;
(f)
duration of the deposit and the date on which each deposit is repayable;
(g)
rate of interest or such deposits to
be payable to the depositor;
(h)
due date for payment of interest;
(i)
mandate and instructions for payment of
interest and for non-deduction of tax at source, if any;
(j)
date or dates on which the payment of interest shall be made;
(k)
details of deposit insurance
including extent of deposit insurance;
(l)
particulars of security or charge created for repayment of
deposits;
(m)
any other relevant particulars;
The entries shall be made within seven days from the date of issuance of the receipt duly authenticated by a director or secretary of the company or by any other officer authorised by the Board
for this purpose.
The register shall be preserved in
good order for a period of not less than
eight years from the financial year in which the latest entry is made in
the register.
General provisions regarding premature repayment of deposits.
Where a company makes a repayment of
deposits, on the request of the
depositor, after the expiry of a
period of six months from the date of such deposit but before the expiry of the period for which such deposit was accepted,
the rate of interest payable on such
deposit shall be reduced by one per cent
from the rate which the company would have paid had the deposit been accepted
for the period for which such deposit had actually run and the company shall
not pay interest at any rate higher than the rate so reduced
Exemption:
If
the repayment of any deposit before the expiry of the period for which such
deposit was accepted by the company is made solely for the purpose of—
(a)
complying with the provisions of Terms and conditions of acceptance of
deposit by companies.
(b) providing war risk or other related
benefits to the personnel of the naval, military or air forces or to their
families, on an application made by
the associations or societies formed by such personnel, during the period of emergency declared under article
352 of the Constitution.
If a company referred
to section 73(2) or any eligible company permits a depositor to renew his
deposit, before the expiry of the period for which such deposit was accepted by
the company, for availing of a higher rate of interest, the company shall pay
interest to such depositor at the higher rate if such deposit is renewed in
accordance with the other provisions of these rules and for a period longer
than the unexpired period of the deposit.
If the period for
which the deposit had run contains any part of a year, then, if such part is
less than six months, it shall be excluded and if such part is six months or
more, it shall be reckoned as one year.
Return of deposits to be filed with the
Registrar:
Every company to which these rules
apply, shall on or before the 30th day of June, of every year, file with the Registrar,
a return in Form DPT-3 along with the fee as provided in
Companies (Registration Offices and Fees) Rules, 2014 and furnish the information contained therein as on the 31st day of March
of that year duly audited by the
auditor of the company.
Penal
rate of interest:
Every company shall pay a penal rate
of interest of 18%
per annum
for the overdue period in case of deposits, whether secured or unsecured,
matured and claimed but remaining unpaid.
Power of Central Government to decide
certain questions.:
If any question arises as to the
applicability of these rules to a particular company, such question shall be
decided by the Central Government in consultation with the RBI.
Punishment
for contravention:
If any company referred to section
73(2) or any eligible company inviting deposits or any other person contravenes
any provision of these rules for which no punishment is provided in the Act,
the company and every officer of the company who is in default shall be
punishable with fine which may
extend to Rs.5,000/- 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.
Deposits – CA,1956 Vs CA,2013:
S.No
|
CA,1956
|
CA,2013
|
1
|
Definition:
Section 58A of
the companies Act,1956 defines deposit as,” any deposit
of money with and includes any
amount borrowed by a company but shall not include such categories of
amount as prescribed in the rule 2(b) of CAD Rules,1975, in consultation with
the RBI”.
|
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
prescribed in the rule 2(c) of CAD Rules,2014,in consultation with the
RBI.
|
2
|
Conditions:
There is no
stringent conditions on accepting of deposits from members
|
It imposes stringent
conditions even on accepting of deposit from members of the company.
|
3
|
Acceptance
of Deposit:
Every public
company may accept deposits from the public subject to compliance with the
CAD Rules,1975.
|
Only public
company having Net worth of Rs.100 Crores or Turnover of Rs.500 Crores may
invite, accept or renew deposit from the public.
Other Companies
may invite, accept or renew deposit only from its members.
|
4
|
Deposit
Insurance:
Insurance for
deposit was not specified in the CA,1956
|
The Companies may accept the deposits without deposit
insurance contract till the 31st
March 2015
|
REPAYMENT OF DEPOSITS
ETC.,. ACCEPTED BEFORE COMMENCEMENT OF THE ACT- SEC-74
Where
in respect of any deposit accepted by a company before the commencement of this
Act, the amount of such deposit or part thereof or any interest due thereon
remains unpaid on such commencement or becomes due at any time thereafter, the company
shall—
(a)
file, within a period of three months
from such commencement or from the date on which such payments, are due, with
the Registrar a statement in Form DPT-4* of all the deposits accepted by the company and
sums remaining unpaid on such amount with the interest payable thereon along
with the arrangements made for such repayment, notwithstanding anything Contained in any other law for the time being
in force or under the terms and conditions subject to which the deposit was
accepted or any scheme framed under any law; and
(b)
repay within one year from such
commencement or from the date on which such payments are due, whichever is
earlier.
*It
has been clarified by MCA vide General Circular 27/2014 dated 30th
June,2014 ,the time period for filing Form DPT-4 is extended up to 31st August,2014
without any additional fee in term of Section 403 of the act to enable the
companies to file the statement with the Registrar.
|
Extension
of time for repayment:
The
Tribunal may on an application made
by the company, after considering the
financial condition of the company, the amount of deposit or part thereof
and the interest payable thereon and such other matters, allow further time as
considered reasonable to the company to repay the deposit.
Penalty:
If
a company fails to repay the deposit or part thereof or any interest thereon or
such further time as may be allowed by the Tribunal –
Company
|
Fine
of Rs.1 Crore upto Rs.10 Crores
|
Officer in default
|
Imprisonment upto
7 years or
With fine of Rs,25 lakhs to Rs.2 Crores or
With both.
|
DAMAGES FOR
FRAUD- SEC-75:
Where
a company fails to repay the deposit
or part thereof or any interest thereon or such further
time as may be allowed by the Tribunal and it is proved that the deposits had
been accepted with intent to defraud the
depositors or for any fraudulent
purpose, every officer of the company who was responsible for the acceptance
of such deposit shall be personally responsible, without any limitation of
liability, for all or any of the losses or damages incurred by the depositors
and also liable under section 447 for fraud.
Any suit, proceedings or other action may be
taken by any person, group of persons or any association of persons who had
incurred any loss as a result of the failure of the company to repay the
deposits or part thereof or any interest thereon.
Penalty:
Officer
|
Fraud:
Imprisonment for 6 months to 10 years and
Fine which shall not be less than amount involved in the fraud but
which may extend to 3 times the amount
involved in the fraud.
Fraud
involves public interest:
Imprisonment shall not be less than 3 years.
|
ACCEPTANCE OF DEPOSITS FROM PUBLIC BY
CERTAIN COMPANIES- SEC-76
A
public company, having net worth of not less than Rs.100 Crores or turnover
of not less than Rs.500 Crores, may accept deposits from
persons other than its members subject to compliance with the requirements
provided in section 73(2) and Companies
(Acceptance of Deposit) rules,2014
Obtain
rating from Credit Rating Agency:
Every
company shall be required to obtain the rating (including its net worth, liquidity and ability to pay its deposits on due
date) from a recognised credit rating agency
for informing the public the rating given to the company at the time of
invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits.
Create charge on assets:’
Every
company accepting secured deposits from the public shall within 30 days of such acceptance, create a charge on its assets of an amount not less than the amount
of deposits accepted in favour of the deposit holders in accordance with CAD, rules 2014.
Pursuant to provisions of section 76(2)
of the Act, the provisions of sections 73 and 74 shall, mutatis mutandis, apply to acceptance of deposits from public by
eligible companies.
In case of a company which had
accepted or invited public deposits under the relevant provisions of the
Companies Act, 1956 and rules made under that Act (hereinafter known as
“Earlier Deposits”) and has been repaying such deposits and interest thereon in
accordance with such provisions, the provisions of section 74(1)(b) of the Act
shall be deemed to have been complied with if the company complies with
requirements under the Act and these rules and continues to repay such deposits
and interest due thereon on due dates for the remaining period of such deposit
in accordance with the terms and conditions and period of such Earlier Deposits
and in compliance with the requirements under the Act and these rules.
The fresh deposits by every eligible
company shall have to be in accordance with the provisions of Chapter V of the
Act and these rules.
Comments:
·
All private limited jewellers who run
gold saving schemes for durations of more than a year, fall under the new
Companies Act.
·
Jewellery companies have to treat the money collected through
monthly instalment schemes for gold purchases as deposit.
·
Jewellers running their stores as sole
proprietorships or partnership firms can still run savings schemes without any
panic over the new regulations.
·
No deposit scheme should offer a return
that is higher than what is permitted for NBFCs.
·
The Companies may accept the deposits
without deposit insurance contract till 31st March 2015.
·
Companies which do not meet the
requirements of the law but have deposits running, need to return the deposits
to the public before April 1, 2015.
Definitions:
Deposit
|
Section 2(31) of
CA,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 prescribed in the rule 2(c) of Companies
(Acceptance of Deposit) Rules,2014,in consultation with the RBI.
|
Rule
2 (C) of CAD Rules,2014
(i) any amount
received from the Central Government
or a State Government, or any
amount received from any other source
whose repayment is guaranteed
by the Central Government or a State Government, or any amount
received from a local authority, or
any amount received from a statutory
authority constituted under an Act of Parliament or a State Legislature.
|
|
(ii) any amount
received from foreign Governments,
foreign or international banks, multilateral financial institutions
(including, but not limited to, International Finance Corporation, Asian
Development Bank, Commonwealth Development Corporation and International Bank
for Industrial and Financial Reconstruction), foreign Governments owned
development financial institutions, foreign
export credit agencies, foreign collaborators, foreign bodies corporate and
foreign citizens, foreign
authorities or persons resident outside India subject to the provisions
of FEMA, 1999 (42 of 1999) and rules and regulations made there under;
|
|
(iii) any amount
received as a loan or facility from any
banking company or from the State Bank of India or any of its subsidiary
banks or from a banking institution notified by the Central Government
under section 51 of the Banking Regulation Act, 1949 (10 of 1949), or a corresponding new bank as defined in
clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970) or in clause (b) of section (2) of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of
1980) , or from a co-operative bank
as defined in clause (b-ii) of section 2 of the RBI Act, 1934 (2 of 1934).
|
|
(iv) any amount
received as a loan or financial
assistance from Public Financial Institutions notified by the Central
Government in this behalf in consultation with the RBI or any regional
financial institutions or Insurance
Companies or Scheduled Banks as
defined in the RBI Act, 1934 (2 of 1934
|
|
(v)
any amount received against issue of
commercial paper or any other
instruments issued in accordance with the guidelines or notification
issued by the RBI
|
|
(vi)any
amount received by a company from any
other company;
(vii) any amount
received and held pursuant to an offer made in accordance with the provisions
of the Act towards subscription to any securities, including share
application money or advance towards allotment of securities pending
allotment, so long as such amount is appropriated only against the amount due
on allotment of the securities applied for;
(a)
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.
(b)
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
The
director 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
|
|
(ix) any amount
raised by the issue of bonds or
debentures secured by a first charge or a charge ranking pari passu with
the first charge on any assets referred
to in Schedule III of the Act excluding intangible assets of the company
or bonds or debentures compulsorily
convertible into shares of the company within five years
If
such bonds or debentures are secured by the charge of any assets referred to
in Schedule III of the Act, excluding intangible assets, the amount of such bonds or debentures shall
not exceed the market value of such assets as assessed by a registered
valuer;
|
|
(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 or 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 365days from the date of acceptance of
such advance.
In
case of any advance which is subject matter of any legal proceedings
before any court of law, the said time
limit of 365 days shall not apply
(b)as advance, accounted for in any manner
whatsoever, received in connection with
consideration for property under an agreement or arrangement , provided
that such advance is adjusted against the 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
If the amount received 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.
The amount shall
be deemed to be deposits on the expiry of 15 days from the date they become
due for refund.
(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 hall 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
(a) received by the company, whether in the form of instalments or otherwise,
from a person with promise or offer to
give returns, in cash or in kind,
on completion of the period specified in the promise or offer, or
earlier, accounted for in any manner whatsoever, or
(b)
any additional contributions, over
and above the amount made by the
company as part of such promise or offer shall be treated as a deposit;
|
|
Depositor
|
(i)
any member of the company who has
made a deposit with the company in
accordance with the provisions section
73(2) of the Act, or
(ii) any person
who has made a deposit with a public company in accordance with the provisions of section 76 of the Act;
|
Eligible
Company
|
“eligible
company” means a public company as referred to section 76 (1), having a net worth of not less than Rs.100 Crores
or a turnover of not less than Rs.500
Crores and which has obtained the
prior consent of the company in general meeting by means of a special
resolution and also filed the said
resolution with the Registrar of Companies before making any invitation
to the Public for acceptance of deposits
An
eligible company, which is accepting deposits within the limits specified
under section 180(1)(c), may accept deposits by means of an ordinary resolution
|
fees”
means fees as specified in the Companies (Registration Offices and Fees)
Rules, 2014;
|
|
Form or
e-form
|
Form”
or ‘e-Form” means a form set forth in Annexure to these rules which shall be
used for the matter to which it relates
|
Section
|
section”
means section of the Act;
|
Trustee
|
“trustee”
means the trustee as defined in section 3 of the Indian Trusts Act, 1882 (12
of 1882).
|
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