2nd Amendment 2015: Deposits Rules

Ministry of Corporate Affairs placed on its web site a DRAFT notification on 15^th September 2015 which proposed the Companies (Acceptance of Deposits) Second Amendment Rules, 2015.

These rules shall come into force form the date of their publication in the Official Gazette.

Loan from Directors:

Presently, as we discussed earlier here, loan from directors is exempted if “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.”

Now, it is proposed to exempt:

“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.

Provided that the director of the company or relative of the director of the private company, as the case may be, 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 borrowing or accepting loans or deposit from others and the company shall disclose the details of money so accepted in the Board’s report.”

Now, in private companies loan from director of the private company is also exempted.

However, present amendment imposes additional conditions of disclosure of details of money received as loan from directors. Earlier there was only one condition of declaration in writing by person giving loan that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others.

Paid up share capital, free reserve and security premium account:

In Rule 3 of present rules, eligibility for receiving of money is defined with reference to “paid up capital and free reserve”.

Now, this eligibility is proposed to be defined with reference to “paid up capital, free reserve and security premium account” instead of “paid up capital and free reserve”.

Credit Rating for Deposits:

According to last amendment discussed here, Every eligible company shall obtain, at least once in a year, credit rating for deposits accepted by it in the manner specified herein below and a copy of the rating shall be sent to the Registrar of companies along with the return of deposits in Form DPT – 3.

This provision was inserted earlier this year and lists credit rating companies for this purpose. One entry in relation to these listed credit rating companies is amendment:

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