MCA circular dated 7th September, 2020 amending the Companies (Acceptance of Deposits), Rules, 2013 allowing start up companies to accept deposits upto a period of 10 years from the date of their incorporation. Start-ups, of course is defined in the DIPP guidelines to that effect, which is now known as Department for promotion of Industry and Internal Trade.
Start-ups can accept deposits of an amount of Rs.25 lakhs or more by way of convertible note, convertible into equity shares or repayable within a period not exceeding 10 years from the date of issue in a single tranche;
Further maximum limit for acceptance of deposits under section 73 of the Companies Act, 2013 shall not apply to a private company which is a start for a period of 10 years from the date of its incorporation.
Hitherto, the period in both the cases was 5 years.
Companies issuing deposits or debentures as per the provisions of the companies act, 2013 and the rules thereunder are required to keep some amount of their outstanding deposits/ debetures as deposit in a scheduled commercial bank. It should be kept in a separate bank account and named as deposit reserve account or debenture reserve account. The limits for keeping such amounts in the banks are 20% for deposits and 15% for debentures. In both cases, the amount should be secured into the bank account on or before 30th April each year. This year in view of the Covid pandemic, govt. extended this date to 30th June, 2020 and now vide MCA circular dated 19th June, 2020 this date has been further extended to 30th September, 2020.
Vide an amendment to the Companies (Acceptance of Deposits), Rules, 2014 dated 15th September, 2015, the Ministry of Corporate Affairs has now allowed private companies to accept loans from relatives of directors provided the relatives give a written declaration that the loans are being given from out of their own funds and not borrowed from someone else. The company is required to mention the details of such loans taken in the Annual Report.
Earlier vide an amendment in June 2015, private companies were allowed to take loans from members not exceeding 100% of its paid up capital and free reserves. Here also the company is required to file particulars with the Registrar of Companies.
MCA has issued notification on 31st March, 2015 amending the Companies (Acceptance of Deposits) Rules, 2014 to provide that share application moneys which were disclosed as such in the accounts for year ended 31st March, 2014 and pending allotment as on 31st March, 2015 should be either allotted before 1st June, 2015 or returned therewith to the allottees before the said date.
Further every eligible company i.e. every company which is eligible to receive deposits should obtain credit rating for deposits accepted by it in the manner specified from the specified rating agencies and a copy of the rating report should be furnished to the MCA in form DPT-3. So additional compliance requirement for companies which accept deposits.
Further the requirement of having a deposit insurance has been postponed to 31st March, 2016 or till such deposit insurance product is available on the market whichever is earlier.