New Delhi, Sept 16 (KNN) Bringing relief to the private limited companies, government on Tuesday issued a notification allowing acceptance of deposits by private limited companies with suitable disclosures.

The provisions under Companies (Acceptance of Deposits) Rules 2014 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.

The official notification has been issued by the Ministry of Corporate Affairs in this regard. Earlier this year, the Ministry had a consultation with the Reserve Bank of India over the deposit rules.  

Making further rules to amend the Companies (Acceptance of Deposits) Rules, 2014, MoCA in a notification has said, “These rules may be called the Companies (Acceptance of Deposits) Second Amendment Rules, 2015.”

They shall come into force on the date of their Publication in the Official Gazette, it said.

With regards to the Companies (Acceptance of Deposits) Rules, 2014, in rule 2, in sub-rule (1), in clause (c), for sub-clause (viii), the notification said, “any amount received from a Person who, at the time of the receipt of the amount, was a director of the company or a relative of the director of the Private company, provided that the director of the company or relative of the director of the private company, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board's report.”

Further, in rule 3, the notification said that for the words "paid-up share capital and free reserves", wherever they occur, the words "Paid-up share capital, free reserves and securities

The earlier 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,” apex body for MSMEs, FISME, said. (KNN Bureau)