Deposits are crucial Topic under Companies
Act, 2013. As the month of March is on its end, most of the companies which
have taken loan earlier under the companies act 1956 and have filed DPT-4 in
this Financial year declaring that the companies has such and such amount of
deposits as on
31.03.2014, are now required to repay such loan on or before
March 31, 2015 under Section 74(1)(b) otherwise those companies which shall not
repay the amount within the prescribed time period, shall be punishable under
section 74(3) and the penalty is so much swerve that it has brought the
wrinkles on heads of officers of the companies.
Have a serious look into what is stated
herein with your skillful application of mind. Section 74 of
the Companies Act, 2013, provides that any deposit accepted before the
commencement of the Companies Act, 2013, needs to be repaid/refunded on or
before 31st March 2015. The said section also states that a return has to be
filed with ROC in respect of existing deposits.
“(1) 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)……………………………….
(b) repay within one year from
such commencement or from the date on which such payments are due, whichever is
earlier.”
Rule 2(b) of the Companies (Acceptance of Deposits) Rules, 1975 the relevant provision of which is as under:
“ deposit” means any deposit of money with, and includes any
amount borrowed by, a company, but does not include-
(ix) any amount received by a private companies from a
person who, at the time of the receipt of the amount, was a director, relative
of director or member…”
In the Earlier
Companies Act, 2013, Private Company could accept deposits from the following
Sources as per above definitions:
a)
Receiving of Money from the
Directors
b)
Receiving of Money in the form of
Share Application money.
c)
Receiving of Money from the Relative
of Directors and Members.
d)
Receiving of Money as Advanced from
the Customers.
Let’s discuss on above mention points:
A.
RECEIVING OF MONEY FROM THE DIRECTORS:
As per Sub rule (viii) Rule-2 of Acceptance of Deposits by
Companies Rules, 2014, Deposit doesn’t include: Any amount received from a
person who, at the time of the receipt of the amount, was a director of the
Company.
So as per sub rule (viii) All the Companies including
private limited company are allowed to accept loan from the directors of the
Company. Condition: Director
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.
B.
RECEIVING OF MONEY IN THE FORM OF SHARE APPLICATION MONEY:
There are two situations:
i.
Share application money received
before 1st April, 2014.
ii.
Share Application money received
after 1st April, 2014.
I.
Share application
money received before 1st April, 2014:
As per
ICSI FAQ’s No. 126
v Share Application money with the company in excess of 2
months is treated as Deposit under Companies Act, 2013. Would Share Application
money in excess of 2 months existing on 31st March 2014, be termed as deposit?
The Share Application money lying with companies as on 31st
March 2014 may not be termed as deposit in case the same is repaid within 2
months i.e. upto 31st May, 2014. Else the same would also be termed as deposit.
Bare
Act Language:
As per Sub rule (vii) Rule-2 of Acceptance of Deposits by
Companies Rules, 2014: Any amount received as Share application money for issue
of securities. Such securities should be allotted within 60 days from the
receipt of Share application money.
VIEW:
As per the ICSI, FAQ If any company have pending share
application money as on 1st April 2014 irrespective of date of receipt of Share
Application Money. The Company has Two months upto 31st May, 2014 for allotment
of shares.
If Company doesn’t allot shares for such Share application
money upto then
·
Such amount will be treated as
deposits, and
·
Required to file DPT-4, and
·
Repay before 31st March, 2015
II.
Share application
money received after 1st April, 2014:
If Share Application money received after 1st April, 2014
then As per Sub rule (vii) Rule-2 of Acceptance of Deposits by Companies Rules,
2014: Any amount received as Share application money for issue of securities.
Such securities should be allotted within 60 days from the receipt of Share
application money and if company fails to allot shares within 60 days of
receipt of money then company requires refunding same to subscribers within 15
days of expiry of 60 days.
If company fails to allot shares and refund money then such
money will be considered as Deposits.
C.
RECEIVING OF MONEY FROM THE RELATIVES OF DIRECTORS &
MEMBERS:
There are two views of professionals for the amount received
by the Private Limited Companies before 1st April, 2014 from the Relatives of
Directors and Members of Company.
Views:
i.
Above Money will not treat as
Deposits.
ii.
Above Money will treat as Deposits.
I.
ABOVE MONEY WILL NOT TREAT AS DEPOSIT:
a)
Section
74(1) of the Companies Act, 2013 is using the words “any deposit accepted
by a company before the commencement of this Act.” Thus before the
Companies Act, 2013 if a company has accepted any deposit under the
Companies Act,1956(which was in existence prior to 2013 Act), the same needs to
be repaid as per the mandate of section 74(1)(b) on or before 31st March,2015.
b)
Therefore,
all the monies received from relatives of Directors and members of a private
company including the amounts stated in (i) to(xii) of clause (b) of rule
2 of the Companies (Acceptance of Deposits) Rules,1975 on or before the
commencement of companies Act,2013 are not required to be repaid as they were
not deposit when accepted. Crux of Section 74 lies in the fact that when
the amount received whether the same was deposit or not.
The provisions of Section 74 of
the Companies Act are applicable only to deposits which were accepted in
accordance with the provisions of section 58A of the Companies Act, 1956 read
with Companies (Acceptance of Deposits) Rules, 1975. Unfortunately due to
misinterpretation of Section 74 many unnecessary returns have been filed
with ROC and the same is being pressed to be filed again.
II.
ABOVE
MONEY WILL TREAT AS DEPOSIT:
In the safer side
many professionals have view that any amount received from the relatives of
directors and members even before 1st April, 2014 will be considered as deposits
under Companies Act, 2013. Therefore following compliances will be required to
be done by Companies:
·
File
DPT-4
·
Repay
before 31st March, 2015
But the question if
company not able to repay the same. As per me following are the way outs:
1.
The Companies, which have filed
DPT-4, should repay the whole amount before the end of this month as the
companies have already declared that the amount was a deposit and hence, need
to repay such amount as per Section
74(1)
2.
Wait for any clarification to be
issued by the Ministry in this regard but caution it can be too late for those corporate,
if no clarification being issued or if issued, is not in favour of corporate.
3.
The Best option is to file an
application with Tribunal/ Company Law Board before March 31, 2015 under section
74(2)for getting further time for the
repaying the deposit amount. As once, the application is being filed; the
company may get the time till the time CLB gives any order.
And The extension to be given by CLB depends upon the
financial position of the company, the efforts taken up by the company during
the year in repayment of deposits, further efforts taken by the company in
repayment of balance deposits etc. as we have seen in a high profile company
case that the extension has been given only for 6 months and that only in case
when the company has repaid back the substantial part of its deposits and have
applied to the Bank for obtaining loan with which the balance deposit shall be
repaid.
D. RECEIVING
OF MONEY AS ADVANCED FROM THE CUSTOMERS.
Bare
Act Language:
As per Sub rule (xii) Rule-2 of Acceptance of Deposits by
Companies Rules, 2014: Any amount received as advances from the customers. Such
work should be done within 365 days from the receipt of Share application money
otherwise company have to repay such amount to the customer before expiry of
365 days.
If company fails to repay within 365 days then such amount
will be considered as deposits.
VIEW:
If any company has advance money as on 1st April 2014
irrespective of date of receipt of Money received. The Company has 365 days
upto 31st March, 2015 for repayment of same..
If Company doesn’t refund such Advance money then
·
Such amount will be treated as
deposits, and
·
Required to file DPT-4, and
·
Repay before 31st March, 2015]
FAQ’S
|
S. No.
|
QUESTION & ANSWERS
|
|
A.
|
If the
deposit is due within 6 month of Commencement of the Act, 2013, then what is
the time period for the payment of deposit?
|
|
|
As per
Transition period of given by the Act for repayment of deposits.
Than
Company will be entitled to repay deposits within one year of commencement.
In this case the company gets an additional period of 6 months
|
|
B.
|
What is
the Last date of repayment of deposits accepted before commencement of the
2013, Act?
|
|
|
All the
deposits accepted before commencement of the act 2013 are required to be
repaid no later than one year from
the date of commencement of the 2013, Act.
|
|
C.
|
If
deposits accepted before commencement of the 2013, Act not fallen for due and
for re payment then what is the last date of repayment of same?
|
|
|
All the deposits accepted before
commencement of the act 2013 are required to be repaid no later than one year from the date of commencement of
the 2013, Act. Irrespective of whether such deposits have fallen due for
payment or not.
|
|
D.
|
If a
company is regular in payment of interest/ deposits then is it mandatory to
repayment of deposits before 31.03.2015?
|
|
|
Irrespective
of whether company is regular in payment of interest/ deposits it’s mandatory
to repayment of deposits before 31.03.2015
|
|
E.
|
Whether
deposits accepted prior commencement of Companies Act, 2013 can be renewed or
not?
|
|
|
Deposits
accepted prior to the commencement of the 2013 Act, need to be communicated
to the Registrar and they cannot be renewed. Such deposits are required to be
repaid within one year of commencement of the 2013 Act.
|
|
F.
|
If a
person ceases or resign from the post of director after giving loan then such
loan will be considered as deposits or not?
|
|
|
Requirement
of director will be check at the time of receipt of amount. Thus, later he
may cease to be a director.
|
|
G.
|
If
deposit in the joint name of director and other person then how it will be
treated?
|
|
|
A
deposit in joint names of director and another person, who may or may not be
director should be permissible, if name of director is first depositor,
though there is no specific provision.
|
|
H.
|
Borrowings
which are excluded from the definition of Deposits?
|
|
|
ü
Amount
from government and guaranteed by government.
ü
Amount
received from foreign government or foreign Bank.
ü
Loan
from banks and FI.
ü
Amount
received against commercial paper.
ü
Inter
corporate borrowing.
ü
Subscription
to securities and call in advance.
ü
Amount
from Directors.
ü
Secured
Bonds/debentures.
ü
Convertible
bonds/debentures.
ü
Non-interest
bearing security deposit from employee.
ü
Amount
in trust.
ü
Advance
and security deposit received by company.
ü
Unsecured
loans from promoters.
ü
Amount
accepted by Nidhi Company.
|
|
INTER
CORPORATE BORROWING:
As per definition of deposit Inter corporate
borrowings doesn’t fall under preview of deposits. Therefore if a company
wants fund then Company can take Loan from other company such loan will not
treat as deposits.
Any amount received by a company from another company
is not ‘deposit’. Thought there is no restriction on the company borrowing
the money, the lending company has to observe limits of lending as specified
in section 186 of Companies Act,. 2013.
Check: Before
giving any Inter Corporate Loans check the applicability of Section 185 on
such transaction. (Like: If director of lending company is director or member
of borrowing Company then inter corporate loans not allowed, such loan fall
under category of Loan to director)
| |
|
AMOUNT
FROM DIRECTORS:
Any amount received from a person who was director
of the company at the time of receipt of the amount is not ‘deposit’.
Condition: The director
should declare in writing that the money he is depositing is not borrowed or
accepting loans or deposits from others.
| |
|
UNSECURED
LOANS FROM PROMOTERS:
Unsecured loans brought by promoters or relatives
in pursuance of stipulation of financial institutions or bank. However, after
the loan is repaid the Banks/FI, the amount from promoters or their relatives
will be treated as ‘deposit’.
| |
|
S. No.
|
Particular
|
Time Period of
Repayment
|
|
A.
|
If the deposits f all due for repayment after one year
after the commencement of 2013 Act.
|
Then maximum time period for repayment will be one year
from the date of commencement of 2013 Act.
|
|
B.
|
If deposits fall due for repayment within one year after
the commencement of the 2013 then.
|
Then maximum time period for repayment will be one year
from the date of commencement of 2013 Act.
|
|
C.
|
If the repayment of deposits are over due by less than one
year before the date of commencement of the 2013 Act.
|
Then the deposits shall be repaid within a period of one
year from such commencement or one year from the date deposits fell due for
repayment whichever is earlier and hence the maximum time period may be less
than one year from the date of commencement of the Act.
|
Distinction
between Loan and Deposits:
For the Purpose of provisions of public deposits, all
borrowings are ‘deposits’ unless excluded
In V srinivas v. Saraswathi Finance
Corporation (2002), It was observed, ‘While a loan may include deposit, every
loan is not a deposit.
In
Sharda Talkies Firm V. Smt Madhulata Vyas AIR 1996, it was held that there is
subtle distinction between a deposit and a loan. In case of loan, the amount is
given by creditor to debtor at the request of and for requirements and dues of
the debtor under certain terms and conditions, In case of a deposit; the
depositee receives money at the instance of depositor. In case of loan, the
debtor has to request the creditor to advance certain amount for meeting his
requirements.
(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES
Company Secretary in Practice from Delhi and can be contacted at
csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this document have
been prepared on the basis of relevant provisions and as per the information
existing at the time of the preparation. Though utmost efforts has made to
provide authentic information, it is suggested that to have better
understanding kindly cross-check the relevant sections, rules under the
Companies Act, 2013. The observations of the author are personal view and the authors do not take
responsibility of the same and this cannot be quoted before any authority
without the written)
No comments:
Post a Comment