Jurisdiction of NCLT Delhi Bench

MCA via Order No. 25/1/2016-NCLT dated 29th June 2016 has laid down the following criteria for listing of the matters before NCLT, Principal & new Delhi bench

The existing and new matters w.e.f. 1st July, 2016 will be listed before the above mentioned benches stationed at Block-3, 6th-7th Floor, CGO Complex, Lodhi Road, New Delhi- 110003

Click here to download the notification

Amendment in Deposit Rules

MCA vide notification no dated June 29, 2016 has amended the Companies (Acceptance of Deposits) Rules, 2014, vide the Companies (Acceptance of Deposits) Amendment Rules, 2016.

Following are the key changes in rules:

1. Now 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 bonds or debentures compulsorily convertible into shares of the company within ten years instead of five years as provided currently , will be not be treated as deposits

2. Following amounts has been added in the exemption category of deposits:

1. any amount raised by issue of non-convertible debenture not constituting a charge on the assets of the company and listed on a recognised stock exchange as per applicable regulations made by Securities and Exchange Board of India.
2. any amount received as an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement, 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.
3. any amount received as an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government.
4. any amount received as an advance for subscription towards publication, whether in print or in electronic to be adjusted against receipt of such publications”
5. any amount received by way of subscription in respect of a chit under the Chit Fund Act,1982 (40 of 1982)
6. any amount received by the company under any collective investment scheme in compliance with regulations framed by the Securities and Exchange Board of India,
7. an 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.

3. The term ‘start-up’ has been defined to means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognised as such in accordance with notification number C.S.R. 180(E) dated 17'h February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.

4. The term “convertible note” has been defined to mean an instrument evidencing receipt of money initially as a means an instrument evidencing receipt of money initially as a debt, which is repayable at the option of the holder, or which is convertible into such number of equity shares of the start-up company upon occurrence of specified events and as per the other terms and conditions agreed to and indicated in the instrument.

5. The limit of amount upto which deposit can be accepted by a company from its members has been increased from 25% to 35%. Further a private company may accept from its members monies not exceeding one hundred per cent 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 such manner as may be specified

6. The minimum credit rating required for receiving deposits by the eligible companies as defined in the rules has been omitted and now the credit rating shall not be below the minimum investment grade rating or other specified credit rating for fixed deposits, from any one of the approved credit rating agencies as specified for Non-Banking Financial Companies in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998, issued by the Reserve Bank of India, as amended from time to time. Further every eligible company shall obtain at least once in a year, credit rating for deposits accepted by it and a copy of the rating shall be sent to the Registrar of Companies along with the return of deposits in Form DPT-3.

7. The period for obtaining deposit insurance has been increased till 31st March, 2017 or till the availability of a deposit insurance product, whichever is earlier.

8. Every company, other than a private company, shall disclose in its financial statement, by way of notes, about the money received from the director.

9. Every private company shall disclose in its financial statement, by way of notes, about the money received from the directors, or relatives of directors.”

The aforesaid amendments is a much needs respite to the Industry which is facing the huge liquidity related issues. Further exemption of amount received by Start-up will bring down the procedural requirement and facilitate ease of raising funds.

Click here to download the notification