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SEP 22, 2017

Amendments in the Acceptance of deposits rules and notification of restrictions on number of layers of subsidiaries

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MCA vide Notification No. G.S.R. 1172(E) dated September 19, 2017 has amended the Companies (Acceptance of Deposits) Rules, 2014 w.e.f. 19.09.2017.

Key features of the amended rules:

  • A Specified IFSC Public company and a private company may accept from its members monies not exceeding 100% of 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.
  • The maximum limit in respect of deposits to be accepted from members (i.e. 35%  of the aggregate of the paid-up share capital, free reserves and securities premium account) shall not apply to following classes of private companies, namely:—
  • a private company which is a start-up, for 5 years from the date of its incorporation;
  • a private company which fulfils all of the following conditions, namely:—
  • which is not an associate or a subsidiary company of any other company;
  • 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
  • such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73.

Click here to download the amended rules

MCA notifies rules related to Restrictions on number of layers

MCA vide Notification No. S.O. 3086(E) dated September 20, 2017, has enforced the proviso to clause (87) of section 2 of the Companies Act, 2013 (i.e. restrictions on number of layers of subsidiaries) w.e.f. 20.09.2017.

In this line, MCA vide Notification No. G.S.R. 1176(E) dated September 20, 2017 has notified the Companies (Restriction on number of layers) Rules, 2017 under aforementioned proviso w.e.f. 20.09.2017.

Key features of the rules:

  • Any company (other than banking company, NBFC, insurance company & Government Company) shall not have more than two layers of subsidiaries. However, this provision shall not apply on a company acquiring a company incorporated outside India with subsidiaries beyond two layers as per the laws of such country.
  • For computing the number of layers under the aforementioned proviso, one layer which consists of one or more wholly owned subsidiary or subsidiaries shall not be taken into account.
  • The provisions of this rule shall not be in derogation of the proviso to sub-section (1) of section 186 of the Companies Act, 2013.
  • Every company (other than banking company, NBFC, insurance company & Government Company), existing on or before the commencement of these rules, which has number of layers of subsidiaries beyond two layers -
  • shall file, with the Registrar a return in Form CRL-1 disclosing the details specified therein, within a period of 150 days from the date of publication of these rules in the Official Gazette (i.e. 20.09.2017);
  • shall not, after the date of commencement of these rules, have any additional layer of subsidiaries over and above the layers existing on such date; and
  • shall not, in case one or more layers are reduced by it subsequent to the commencement of these rules, have the number of layers beyond the number of layers it has after such reduction or maximum layers, whichever is more.

Click here to download the Notification relating to enforcement of section

Click here to download the rules