Return of Loans, Deposits and a “not a Deposits”

After the recent amendment dated 22nd January 2019, Form DPT – 3 which has its legal name as “Return of Deposit” shall be used for filing return of deposit or particulars of a transaction not considered as deposit or both. It includes Loan but excludes capital and day to day business receipts. We will discuss seriously latest amendment in these “no longer only the Deposits Rules, 2014”.

Ministry of Corporate Affairs by Notification GSR 42(E) dated 22^nd January 2019 amended the Companies (Acceptance of Deposits) Rules, 2014 with effect from that date.

Real Estate Investment Trusts

An amount received by a Real Estate Investment Trusts will no longer be treated as deposits under these rules. These will surely a boost for Real Estate Investment Trusts and real estate sectors.

Return of Deposits

Now, Form DPT – 3, the Return of Deposits shall be used for filing of return of deposits, particulars of a transaction not considered as deposit or both.

According to the newly inserted explanation to Rule 16, Form DPT – 3 shall be used for filing return of deposit or particulars of a transaction not considered as a deposit or both by every company other than Government Company.

This is an interesting exemption to Government Companies. There is no exemption to Government Companies under an exemption notification issued. This drafting disaster suggested that Government Companies got an exemption from filing Form DPT – 3. However, the intention of the ministry is to exempt Government Companies from this newly inserted explanation only. This may also be confirmed by a plain reading of Rule 16A(3).

One time return

The first question I asked after reading these amendments, Why one time return in this Rule 16A?

Rule 16A(3) read as under:

“Every company other than Government company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in terms of clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to the date of publication of this notification in the Official Gazette, as specified in Form DPT-3 within ninety days from the date of said publication of this notification along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.”

To better understanding, we should read Rule 16A(3) after reading Rule 20 of these Rules. It is not a great help but held to understand concerns of Government about public money and its misuse by companies. I hope/afraid, such onetime returns will come again and again until they make such information form of Annual Form DPT – 3.  Presently such reporting is, otherwise, part of the annual report under notes to accounts.

Rule 16A(3) is not applicable to a Government Company. This is a one-time return. This one-time return talks about a period starting from 1^st April 2014 to 22^nd January 2019. This Return should be filed within 90 days from the date of publication of this notification. The due date, therefore, will be Sunday, 21^st Day of April 2019. This return shall be on Form DPT – 3. Every company shall file this one time return of outstanding amount only. This outstanding amount to be reported may be –

• Receipt of money; and/or
• Loan (secured, unsecured or hybrid).

In this one time return, a company is not required to report any amount considered as deposit and reported in Annual Form DPT – 3. {Note: Though the nomenclature of form is same, we should consider it two forms, “Annual Return Form DPT – 3” and “One-time return From DPT-3”, for good understanding.

Any loan from holding, subsidiary, directors or relatives, or any other person should be taken into consideration. One should go through the definition of deposit under Rule 2(1)(c) of the Deposits Rules, 2014 and list out all possible exempted amounts. The list of amounts to be reported is mentioned late in this post.

All these amounts shall be part of Onetime return DPT-3.

Major points in updated Form DPT – 3

Please note updated version of the Form DPT – 3 accommodating these amendments yet not available. However, it is advisable to start the compilation of data so that it may be ready well before the due date of 21^st April 2019.

Purpose of the Form

Updates form will ask purpose, whether it is (a) Annual return of deposit; (b) it is a one-time form of outstanding deposit under rule 20 or (c) deposit and loan under Rule 16A(3).

Total amount

This includes the total amount to be reported under one-time return under Rule 16A(3).

Particulars of amounts to be reported

This is a long list of outstanding amount to be reported. These outstanding include:

(a) Any amount received from –

(i) the Central Government; or

(ii) a State Government; or any amount received from any other source whose repayment is guaranteed by the Central Government or State Government; or

(iii)any amount received from a local authority; or

(iv)any amount received from statutory authority constituted under an Act of Parliament or a State Legislature.

(b) Any amount received from –

(i) Foreign Governments; or

(ii) Foreign or international banks;

(iii) Multilateral financial institutions;

(iv) Foreign Governments owned development financial institutions;

(v) Foreign export credit agencies;

(vi) Foreign collaborators;

(vii) Foreign body corporates;

(viii) Foreign citizens;

(ix) Foreign authorities or;

(x) Person residents outside India subject to the provisions of Foreign Exchange Management Act, 1999 (42 of 1999).

(c) Any amount received as –

(i) A loan or facility from any banking company; or

(ii) From the State Bank of India or any of its subsidiary banks; or

(iii) From a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949); or

(iv) A corresponding new bank as defined in clause( d )of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980); or

(v) From a cooperative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934).

(d) Any amount received as a loan or financial assistance from –

(i) Public Financial Institutions notified by the Central Government; or

(ii) Any regional financial institutions; or

(iii) Insurance companies; or

(iv) Scheduled Banks as defined in the Reserve Bank of India Act, 1934 (2 of 1934).

(e) Any amount received against the issue of commercial paper or any other instruments issued in accordance with the guidelines or notification issued by the Reserve Bank of India.

(f) Any amount received by the company from any other company.

(g) Any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of securities applied for.

(h) Any amount received from a person who, at the time of the receipt of the amount, was a director of the company or the relative of the director of a private company.

(i) (A)Any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company; or (B) bonds or debentures compulsorily convertible into shares of the company within ten years.

(j) Any amount raised by the issue of non-convertible debentures not constituting a charge on the assets of the company and listed on a recognized stock exchange as per applicable regulations made by Securities and Exchange Board of India.

(k) Any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit.

(l) Any non-interest bearing amount received and held in trust.

(m) Any amount received in course of, or for the purposes of the business of the company-

(i) As an advance for the supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty-five days from the date of acceptance of such advance.

(ii) As advance accounted for in any manner whatsoever, received in connection with consideration for immovable property under an agreement or arrangement, provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement.

(iii) As a security deposit for the performance of the contract of supply of goods or provision of services.

(iv) As advance received under long term projects for supply of capital goods except those covered under item (b) of sub-clause (xii) clause (c) of sub-rule (1) of the rule (2) of the Companies (Acceptance of Deposits) Rules, 2014.

(v) As an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per the written agreement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less.

(vi) As advance received and allowed by any sectoral regulator or in accordance with directions of Central or State Government.

(vii) As an advance for subscription towards publication, whether in print or electronic to be adjusted against receipt of such publications.

(viii) Any amount brought in by promoters of the company by way of unsecured loans in pursuance of the stipulation of any lending financial institution.

(ix) Any amount received by a Nidhi company in accordance with the rules made under section 406 of the Act.

(x) Any amount received by way of subscription in respect of chit under the Chit Funds Act, 1982(4 of 1982).

(xi) Any amount received by the company under any collective Investment scheme in compliance with regulations framed by the Securities and Exchange Board of India.

(xii) Any amount of twenty-five lakh rupees or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person.

(xiii) Any amount received by a company from –

(A) Alternate Investment Funds;

(B) Domestic venture Capital Funds;

(C) Infrastructure Investments Trusts;

(D) Real Estate Investment Trusts;

(E) Mutual Funds registered with the Securities and Exchange Board of India.