The Ministry of Corporate Affairs (“MCA”) has issued the Companies (Acceptance of Deposits) Amendment Rules, 2016 (“Rules”) to further amend the Companies (Acceptance of Deposits) Rules, 2014.
The summary of the key amendments brought in by the Rules are provided below:
► Rule 2: Definition of Deposit - The Rules inserted the following key exclusions from the definition of ‘deposit’ under the Companies Act, 2013:
a) Any amount raised by issue of non-convertible debentures not constituting a charge on the assets of the company and listed on a recognised stock exchange as per SEBI regulations.
b) Any amount received by way of subscription in respect of a chit fund under the Chit Fund Act, 1982;
c) Amount received by the company under any collective investment scheme in compliance with SEBI Regulations;
d) Amount of INR 25 Lakhs received by a start-up company by way of a convertible note in a single tranche from a person etc.
e) Amount received from Alternative Investment Funds, Domestic Venture Capital Funds and Mutual Funds registered as per SEBI regulations
► Rule 3 (3) (a): Terms and conditions of acceptance of deposits: The quantum for acceptance of deposits is increased to 35% of the aggregate of the paid up share capital and free reserves from the existing limit of 25%for companies referred to in Section 73(2);
► Rule 4 (2): Mode of Advertisement: Amended to provide that the circular shall be advertised in an English newspaper having nationwide circulation and also be uploaded on the website of the Company, if any keeping other provisions unaltered;
► Rule 5 (1): Manner and extent of Deposit Insurance: Amended to provide that the companies may accept deposits without deposit insurance contract till the 31 March 2017 or till the availability of a deposit insurance product whichever is earlier;
► Rule 16 (A) inserted: Disclosures in the Financial Statement: Every Company, other than a private company, shall disclose in the notes to its financial statement, the money received from the Director and all private companies are required to disclose in the notes to its financial statements, the money received from the Directors or their relatives.
The amendment rule shall come into force from the date of publication in the Official Gazette.
To read the amendment rule, please visit the below link:http://www.mca.gov.in/Ministry/pdf/Rules_30062016.pdf