Amendment in Deposit Rules

 Ministry of Corporate affairs vide notification dated 29^th June, 2016 has amended Companies (Acceptance of Deposits) Rules, 2014: Highlights of same is as follows:

1.             Following are excluded from the definition of Deposit:

a.     Compulsory Convertible Debentures can be issued for 10 years

b.     Unsecured Non Convertible Debentures listed on stock exchange

c.     Any non-interest bearing amount received and held in trust

d.    Amount received in advance for future service agreement

e.    Amount received by any sectoral regulator or by directions of government

f.    Advance for subscription towards publication

g.   Chit amount received in accordance with Chit Fund Act

h.   Amount received from Alternate investment Funds, Domestic Venture Capital funds and Mutual Funds

i.    Amount received under collective investment scheme

j.    Amount of twenty five lakhs or more received by a start-up company by way of convertible note

2.             Terms and conditions of acceptance of deposits by companies

a.    Limits enhanced for acceptance/renewal of deposit upto 35 % paid up + free reserves + Securities Premium  

b.   Private company can loan from members = paid up + free reserves + Securities Premium

3.             Minimum credit rating specified  

4.             Disclosure in financials

a.       Private Companies - loan taken from directors/relatives of directors

b.      Others - loan from directors

5.               Disclaimer – in DPT -1 ie., Circular in the Form of Advertisement inviting 

Deposits  stating that the Registrar or Central government doesn’t take responsibility either for the financial soundness of any deposit scheme or for the correctness of the statements made or opinions expressed in the circular.  The depositors should exercise due diligence before investing in the deposits schemes