The Companies Act, 2013 has placed certain compliances to increase the transparency in operations and management of the company. While accepting loans and deposits as proprietors or partnership firms is not a concern, you need to report the same to regulatory authorities if you are operating as a company. In order to avoid any hassle or regulatory challenges, it is important to understand the norms surrounding the acceptance of deposits by the companies. Let’s have a detailed understanding of the same.
What are Deposits Under Companies Act?
Section 2(31) of the Companies Act, 2013 defines deposits to include 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. Rule 2(1)(c) of the Companies (Acceptance of Deposits Rules), 2014 specifies the amounts that should not be considered as deposits. Some of the key transactions not considered as deposits include:
- An amount received from the government or guaranteed by the government
- An amount received from foreign governments, foreign or international banks, multilateral financial institutions etc.
- Loan received from the bank
- Loan or financial assistance received from the Public Financial Institutions notified by the Central Government
- An amount received against the issue of commercial papers or any other instrument
- An amount received by a company from any other company
- An amount received towards subscription of securities, including share application money or advance towards allotment of securities.
- An amount received from a person who was a director or a relative of the director of the company at the time of receipt of the amount.
- An amount raised by the issue of bonds or debentures of the company secured by a first charge or charge ranking pari passu with the first charge on any assets.
- An amount received from an employee of the company that does not exceed his annual salary.
- A non-interest-bearing amount received and held in trust
- The amount received in the course or for the purpose of the business of the company as:
- An advance for the supply of goods or provision of services
- An advance received as consideration for property under an agreement or arrangement
- As a security deposit for the performance of any contract for supply of goods or services
- An advance received for long-term projects or for the supply of capital goods
- An advance as consideration for providing future services in the form of a warranty or maintenance contract
- An advance received and allowed by the sectoral regulator
- An advance received for subscription towards publication whether in print or electronic media
- An amount bought in by the promoters of the company as unsecured loans as a result of stipulation of any lending financial institution or bank
- An amount accepted by the Nidhi companies
- An amount received through subscription of a chit under the Chit Fund Act, 1982
- An amount received under any collective investment scheme
- An amount of Rs. 25 lakhs or more received by a startup company through convertible notes in a single tranche from any person
- An amount received by a company from Alternate Investment Funds, Domestic Venture Capital Funds and Mutual Funds registered with SEBI
Every company that has taken or accepted deposits, loans or advances not considered as deposits is required to file a return of deposit in Form DPT-3 with the Registrar of Companies. The due date for return of deposit is 30th June after the end of the financial year along with the payment of fees prescribed under the Companies (Registration Offices and Fees) Rules, 2014.
Maintenance of Register of Deposits
The companies are mandatorily required to maintain a register of deposits as per the provisions of the Companies Act, 2013. The particulars of each depositor should be entered into the register of deposits within 7 days of the issue of the deposit receipt. The Company Secretary, Director or any other person authorised by the board should authenticate the entries in the deposit register. Like other records, the company should preserve the register of deposit for 8 years as well.
Non-Applicability of Return of Deposits
Certain classes of companies are provided an exemption from filing returns of deposits. These include:
- Banking company
- Non-Banking Financial Company (NBFC) registered with RBI
- Government company (in case of deposits exempted)
- Housing Finance Companies (HFC) registered with the National Housing Bank
Following were the comprehensive details relating to the acceptance of deposits by the companies. If you need any assistance in relation to MCA compliances or information on acceptance of deposits, loans and advances, feel free to contact the ASC Group.