Unlimited Deposits for certain companies


Ministry of Corporate Affairs amended the Companies (Acceptance of Deposits) Rules, 2014 recently. The Companies (Acceptance of Deposits) 2nd Amendment Rules, 2017, was published and come into force on 20th September 2017. These amendment permit, in case of specified private companies, to accept deposit without any maximum limits.

Limited to Private Companies

Earlier on 29th June 2016, Ministry of Corporate Affairs inserted following proviso in sub-rule (3) of Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014:

“Provided that a private company may accept from its members, monies not exceeding one hundred percent of the aggregate of the paid-up share capital, free reserves and securities premium account and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.”

This proviso has been substituted by the Companies (Acceptance of Deposits) 2nd Amendment Rules, 2017:

“Provided that a Specified IFSC Public company and a private company may accept from its members, monies not exceeding one hundred percent of the aggregate of the paid-up share capital, free reserves and securities premium account and such company shall file the details of monies so accepted to the Registrar in Form DPT-3.

Explanation.—For the purpose of this rule, a Specified IFSC Public company means an unlisted public company which is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi-services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006:

Provided further that the maximum limit in respect of deposits to be accepted from members shall not apply to following classes of private companies, namely:—

(i) a private company which is a start-up, for five years from the date of its incorporation;

(ii) a private company which fulfils all of the following conditions, namely:—

(a) which is not an associate or a subsidiary company of any other company;

(b) the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid-up share capital or fifty crore rupees, whichever is less; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73:

Provided also that all the companies accepting deposits shall file the details of monies so accepted to the Registrar in Form DPT-3.”

These Rules provide relief to following classes of companies –

  1. Private companies;
  2. Unlisted public companies which is licensed to operate from the International Financial Services Centre;
  3. Startup private companies for 5 years; and
  4. Private companies satisfying conditions specified in clause (ii) of the second proviso of sub-rule (3) of rule 3.

Private Companies

A private company may accept deposits from its members, monies not exceeding one hundred percent of the aggregate of the paid-up share capital, free reserves and securities premium account.

IFSC Companies

The unlisted public company, which is licensed to operate from the International Financial Services Centre, may accept deposits from its members, monies not exceeding one hundred percent of the aggregate of the paid-up share capital, free reserves and securities premium account.

Startup private companies

A start-up private company may accept deposit without any limit for five years from the date of its incorporation.

Private companies satisfying conditions specified

A private company satisfying following conditions may accept deposits without any limit –

(a) which is not an associate or a subsidiary company of any other company;

(b) the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid-up share capital or fifty crore rupees, whichever is less; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73.

Return of Deposit

According to Rule 3 and 16 of the Companies (Acceptance of Deposits) Rules, 2014, all the companies accepting deposits shall file the details of monies so accepted to the Registrar in Form DPT-3.

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