Presentation on Acceptance of Deposits under Companies Act, 2013

SAS Partners Corporate Advisors
“Synergistically Assured Strategies”
COMPANIES ACT, 2013
ACCEPTANCE OF DEPOSITS BY COMPANIES
26.04.2014

Definition (Sec 2(31) WEF 01.04.2014)
“Deposit” includes any receipt of money by way of deposit or loan or in any
other form by a company, but does not include such categories of amount as
may be prescribed in consultation with the Reserve Bank of India;
Exclusions ( Sec 73 WEF 01.04.2014)
× Banking Companies
× NBFC’s
× Housing Finance Company
× Companies specified by the
CG
Sections 73 to 76 of Companies Act, 2013 & Companies (Acceptance of Deposits) Rules,
2014 deals with Deposits

All Companies Eligible Companies^
Max 25 % of paid
up + Free Reserves
from Others
Max 10 % of paid
up + Free Reserves
from Members
(AND)
From
Members
Max 25% of Paid up
+ Free Reserves
Government Companies
can accept deposits up to
35 % of its Paid up capital +
Free Reserves from public
Maximum % Up to which a Company can accept Deposits
( Rules WEF 01.04.2014)

^Eligible Companies (Sec 76 WEF 01.04.2014)
Every Public
Company
Having Turnover not less
than 500 Cr Rupees
OR
Having Net worth not
less than 100 Cr Rupees

List of exempted Deposits ( Rules WEF 01.04.2014)
“Deposit” includes any receipt of money by way of deposit or loan or in any other form,
by a company, but does not include
•Loan taken from the Financial institutions which are notified by Central Government ;
•Any amount received from or whose repayment is Guaranteed by the State, Central &
Foreign Government or International Banks ;
•Any amount received against issue of commercial papers or any other instruments,
which are issued in accordance with the law ;
•Any non-interest bearing amount received or held in a Trust ;
•Any amount received as advance or security deposit as per the contract or agreement
in the normal course of business ;

•Amount received from promoter as a part of Loan Agreement from Banks;
•Share Application money or advance money received towards allotment kept in a
separate account for 60 days;
•Any amount received by a company from any other company;
•Amounts received from the Director of the Company;
•Any amount received from an employee of the company and
•Any amount raised by the issue of bonds or debentures.
List of exempted Deposits( Rules WEF 01.04.2014) ( Cont.)

Deemed Deposit (Rules WEF 01.04.2014)
Share application money has been received but securities were not allotted within 60
days from the date of receipt, nor it was refunded within 15 days from the
completion of 60 days.
Bonds and debentures issued exceeding market value.
Deposits by Employees in excess of their annual salary in the nature of Non-interest
bearing security deposits.
When money is received from the Director or shareholder without obtaining a
declaration
If the company does not refund the amount received in the course of business as
advance for dealing in goods or properties or services even when it does not have any
permission to deal in the same.

Repayment Of Existing Deposits (Sec 74(1) WEF 01.04.2014)
Extension of time for repayment may be granted by the Tribunal
On commencement of this Act or at any time after the deposit becomes due, the
Company shall
File within a period of three months with the Registrar, a statement of all the deposits
accepted by the Company and sums remaining unpaid on such amount with the
interest payable thereon along with the arrangements made for such repayment
Repay within one year from such commencement or
from the date on which such payments are due,
whichever is earlier.
Yet to be
notified

Components of Deposits
Deposit Trustee
Credit Rating for
Public Companies
Deposit
Insurance
Deposit Receipts
Register of
deposits
Deposit
Repayment
Reserve

Deposit Insurance at a glance (Rules WEF 01.04.2014)
Every Company shall enter into a deposit insurance contract at least 30 days before
the issue of circular or advertisement or at least 30 days before the renewal
The deposit insurance contract shall specifically provide that in case of default of
repayment, the depositor is entitled to principal + interest amount as per the Contract
Every Depositor can be assure of INR 20,000 in case the Company makes any defaults
The Company should not
charge the premium paid
on insurance on its
deposit holders.

Trigger Points ( Rules WEF 01.04.2014)
A sum equal to 15 % of deposit maturing during the Financial Year and
the following Financial Year shall be kept in a scheduled bank on or
before 30th April every Year , in the name of Deposit Repayment Reserve
Account
The entries shall be made within seven days from the date of issuance of
the receipt duly authenticated by the authorities., in the register
The deposit receipt need to be given with in 21 days from the date of
receipt of money or realization of cheque or date of renewal
Every Company should file the returns in e form DPT – 03 with the Registrar
on or before 30th June every year

A short note on the procedure for obtaining deposits ( Rules WEF 01.04.2014)
Shareholder’s Approval
Approval From Members/Others
Secured or Unsecured
Circular to all Shareholders
Provision of Deposit Insurance
Creation of Deposit Repayment Reserve Account
Appointment of trustee for depositors
Entry in the Register of Deposits
Creation of Security
Return on Deposits to be filed with ROC

Impact on the Industry

Impact on the Industry ( Cond.)
The following Companies will be affected dreadfully on commencement of this Act
Name of the Company Approx Amount of Deposit (Fig in
Crores) as on 31st March 2013
JaiPrakash Associates Ltd 2355.57
United Spirits Limited 435

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Chennai
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TN, India.
RMS Apts, Door No 16, 3rtd Floor,
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T Nagar, Chennai- 600 017, TN, India
Tel: +91 44 2815 2673/ 2815 2674,
Email: chennai@saspartners.com
About SAS PARTNERS;
Over 10 years of market presence and serving more
than 200 businesses from diversified industries
Divisions : Regulatory Advisory & Support division and
Transaction & Consulting division.
Versatile professional team over 25 professionals
comprising of Company Secretaries, Legal, Finance, and
Business Professionals
Deep rooted entrepreneurial, professional and
regulatory relations
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Regulatory Advisory & Support division
 Corporate Secretarial
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 Due Diligences
Soy Joseph , ACS, ACIS (UK) BL
Sr Partner – Corporate Regulatory
+91 (0) 988421 2845
soy@saspartners.com
Sony George Mathew, MBA, LLB, ACS
Partner – Corporate Regulatory
+91 (0) 98846 56382
sony@saspartners.com
Bangalore
C – 1, Le Chateau Apartments,
No. 90, Infantry Road,
(Opposite to Shafina Plaza)
Bangalore – 560 001
Tel: +91 98846 56382
Email: bangalore@saspartners.com

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