Conditional relief to private ltd companies on acceptance of deposits
Updated: Mar 31, 2015 05:04:45pm
New Delhi, 31st March 2015 (KNN) Amounts received by private companies before 1st April 2014, shall not be treated as deposits under the Companies Act 2014 and Companies (Acceptance of Deposits) Rules 2014, if disclosed appropriately.
The clarification has been issued by the Ministry of Corporate Affairs after consulting Reserve Bank of India following an outcry against the deposit rules.
The MoCA Circular in this regard clarifies that ‘such amounts received by private companies prior to1st April, 20l4 shall not be treated a 'deposits' subject to the condition that relevant private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting
head in which such amounts have been shown in the financial statement.’
Further that ‘any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made
thereunder.’
The Deposit Rules under the Companies Act 2013 had prohibited accepting loans/ deposits from shareholders or relatives of directors etc. In addition, all these companies were required to repay all the deposits (other than from the directors) by 31st March 2015. Violation attracted harsh penalties.
These provisions were particularly denounced by MSMEs. Federation of Indian Micro and Small & Medium Enterprises (FISME) who consistently raised the issue first with the Finance Minister during budget consultations and later to the Parliamentary Standing Committee, welcomed the move.
“Friends and relatives are the most critical source of funds for a large number of MSMEs. Although the retrospective ill-effects of the promulgation are taken care of through this clarification, the major source of funds is now stands closed for future’, FISME release said.
FISME had proposed that the window of raising loans and advances should be allowed to remain opened at least to MSMEs up to a certain threshold.
(KNN/AB)
The clarification has been issued by the Ministry of Corporate Affairs after consulting Reserve Bank of India following an outcry against the deposit rules.
The MoCA Circular in this regard clarifies that ‘such amounts received by private companies prior to1st April, 20l4 shall not be treated a 'deposits' subject to the condition that relevant private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting
head in which such amounts have been shown in the financial statement.’
Further that ‘any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made
thereunder.’
The Deposit Rules under the Companies Act 2013 had prohibited accepting loans/ deposits from shareholders or relatives of directors etc. In addition, all these companies were required to repay all the deposits (other than from the directors) by 31st March 2015. Violation attracted harsh penalties.
These provisions were particularly denounced by MSMEs. Federation of Indian Micro and Small & Medium Enterprises (FISME) who consistently raised the issue first with the Finance Minister during budget consultations and later to the Parliamentary Standing Committee, welcomed the move.
“Friends and relatives are the most critical source of funds for a large number of MSMEs. Although the retrospective ill-effects of the promulgation are taken care of through this clarification, the major source of funds is now stands closed for future’, FISME release said.
FISME had proposed that the window of raising loans and advances should be allowed to remain opened at least to MSMEs up to a certain threshold.
(KNN/AB)
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