Amendment in Companies (Acceptance of Deposits) Rules, 2014
MCA vide notification dated 31st March, 2015 brings much awaited amendment in Companies (Acceptance of Deposits) Rules, 2014 and the details of the said amendment are reproduced as below:
- Amendment in Rule 2(1) (c)
“Provided that unless otherwise required under the Companies Act, 1956 (1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules or regulations made thereunder to allot any share, stock, bond, or debenture within a specified period, if a company receives any amount by way of subscriptions to any shares, stock, bonds or debentures before the 1st April, 2014 and disclosed in the balance sheet for the financial year ending on or before the 31st March, 2014 against which the allotment is pending on the 31st March, 2015, the company shall, by the 1st June 2015, either return such amounts to the persons from whom these were received or allot shares, stock, bonds or debentures or comply with these rules.”
Existing clause vii of Rule 2(1) (c) read as:
(vii) 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 the securities applied for;
Explanation.- For the purposes of this sub-clause, it is hereby clarified that –
(a) Without prejudice to any other liability or action, if the securities for which application money or advance for such securities was received cannot be allotted within sixty days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules.
(b) any adjustment of the amount for any other purpose shall not be treated as refund.
Impact
Through this amendment, a time period has been provided to the companies to repay the amount by 1st June, 2015which was received by it under Companies Act, 1956 (herein referred to as “old Act”) by way of subscriptions to any shares, stock, bonds or debentures before the 1st April, 2014 earlier there was no clarity in relation to amount received under old Act by way of subscriptions to any shares, stock, bonds or debentures. Thus, uncertainty among the stakeholders about the treatment of pending allotment lying in the balance sheet of the company as on 31st March, 2014 is apparent.
Existing clause xii (b) of Rule 2(1) (c) read as:
(xii) any amount received in the course of, or for the purposes of, the business of the company,-
(b) as advance, accounted for in any manner whatsoever, received in connection with consideration for property under an agreement or arrangement, provided that such advance is adjusted against the property in accordance with the terms of agreement or arrangement;
Impact
With this amendment ministry has taken away the exemption which was given with respect to any advance received in connection with movable property earlier exemption was given in connection with property whether it is movable or movable and as per section 44 of the Act “The shares or debentures or other interest of any member in a company shall be movable property transferable in the manner provided by the articles of the company” Thus, it creates a hassle among the Corporates and to mitigate that confusion movable property is out of the preview of exemption and any advance received in connection with movable property shall be treated as deposits from now onwards.
in sub-clause (xii), in the Explanation, for the words “referred to in the first proviso”, the words “referred to in the proviso” shall be substituted;
Existing explanation to clause xii (b) of Rule 2(1) (c) read as:
Explanation. – For the purposes of this sub-clause the amount referred to in the first proviso shall be deemed to be deposits on the expiry of fifteen days from the date they become due for refund.
Correction
Correction is made with this amendment, now the word “first proviso” is replaced by the word “proviso”.
In rule 3, after sub-rule (7), the following sub-rule shall be inserted, namely:-
“(8) Every eligible company shall obtain, at least once in a year, credit rating for deposits accepted by it in the manner specified herein below and a copy of the rating shall be sent to the Registrar of Companies alongwith the return of deposits in Form DPT-3;
Name of the agency Minimum investment Grade Rating (a) The Credit Rating Information Services of India Ltd. FA- (FA Minus) (b) ICRA Ltd. MA- (MA Minus) (c) Credit Analysis and Research Ltd. CARE BBB(FD) (d) Fitch Ratings India Private Ltd. tA-(ind)(FD) (e) Brickwork Ratings India Pvt Ltd. BWRF A (f) SME Rating Agency of India Ltd. SMERA A” Comment
Through this amendment, now rules have specifically provides for adequate safety standard. Thus, every eligible company shall be required to obtain credit rating from the prescribed agencies only and Minimum investment Grade Rating requirement has also been provided.
In rule 5, in sub-rule (1), for the proviso, the following proviso shall be substituted, namely:-
“Provided that the companies may accept deposits without deposit insurance contract till the 31st March, 2016 or till the availability of a deposit insurance product, whichever is earlier.”
Existing proviso to Rule 5(1)
“Provided that the companies may accept the deposits without deposit insurance contract till the 31st March, 2015.”
Impact
Another big relief for corporate with respect to deposit insurance has come up with this amendment which says that Companies may accept the deposits without deposit insurance contract till the 31st March, 2016 or till the availability of a deposit insurance product, whichever is earlier.”
In Annexure, for Form “DPT-3” the new form DPT-3 has been substituted.
Delegation of Power to RDs with respect to section 94(5) of the Act
Central Government vide notification dated 31st March, 2015 hereby delegates to the Regional Directors at Mumbai, Kolkata, Chennai, Noida, Ahmedabad, Hyderabad and Shillong, the powers and functions vested in it under sub-section (5) of section 94 (i.e. Place of keeping and inspection of registers, returns, etc.) of the Companies Act, 2013 which give immediate power to Central government to direct the about the inspection of the document on request of person requiring it.
- in sub-clause (vii), in Explanation (a), the following proviso shall be inserted, namely:-
- in sub-clause (xii), in item (b)
- for the words “consideration for property”, the words “consideration for an immovable property” shall be substituted;
- for the words “against the property”, the words “against such property” shall be substituted
- Amendment Rule 3
- Amendment in proviso to Rule 5(1)
- Amendment in Annexure to Rules