presentation on acceptance of deposits under companies act, 2013

SAS Partners Corporate Advisors

“Synergistically Assured Strategies”

COMPANIES ACT, 2013 ACCEPTANCE OF DEPOSITS BY COMPANIES

26.04.2014



Definition (Sec 2(31) WEF 01.04.2014)

“Deposit” includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India;

Exclusions ( Sec 73 WEF 01.04.2014)

× Banking Companies × NBFC’s × Housing Finance Company × Companies specified by the CG

Sections 73 to 76 of Companies Act, 2013 & Companies (Acceptance of Deposits) Rules, 2014 deals with Deposits



All Companies Eligible Companies^

Max 25 % of paid up + Free Reserves

from Others

Max 10 % of paid up + Free Reserves

from Members (AND)

From

Members

Max 25% of Paid up + Free Reserves

Government Companies can accept deposits up to 35 % of its Paid up capital + Free Reserves from public

Maximum % Up to which a Company can accept Deposits ( Rules WEF 01.04.2014)



^Eligible Companies (Sec 76 WEF 01.04.2014)

Every Public Company

Having Turnover not less than 500 Cr Rupees

OR

Having Net worth not less than 100 Cr Rupees



List of exempted Deposits ( Rules WEF 01.04.2014)

“Deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include •Loan taken from the Financial institutions which are notified by Central Government ; •Any amount received from or whose repayment is Guaranteed by the State, Central & Foreign Government or International Banks ; •Any amount received against issue of commercial papers or any other instruments, which are issued in accordance with the law ; •Any non-interest bearing amount received or held in a Trust ; •Any amount received as advance or security deposit as per the contract or agreement in the normal course of business ;



•Amount received from promoter as a part of Loan Agreement from Banks; •Share Application money or advance money received towards allotment kept in a separate account for 60 days; •Any amount received by a company from any other company; •Amounts received from the Director of the Company; •Any amount received from an employee of the company and •Any amount raised by the issue of bonds or debentures.

List of exempted Deposits( Rules WEF 01.04.2014) ( Cont.)



Deemed Deposit (Rules WEF 01.04.2014) Share application money has been received but securities were not allotted within 60 days from the date of receipt, nor it was refunded within 15 days from the completion of 60 days.

Bonds and debentures issued exceeding market value.

Deposits by Employees in excess of their annual salary in the nature of Non-interest bearing security deposits.

When money is received from the Director or shareholder without obtaining a declaration

If the company does not refund the amount received in the course of business as advance for dealing in goods or properties or services even when it does not have any permission to deal in the same.



Repayment Of Existing Deposits (Sec 74(1) WEF 01.04.2014)

Extension of time for repayment may be granted by the Tribunal

On commencement of this Act or at any time after the deposit becomes due, the Company shall

File within a period of three months with the Registrar, a statement of all the deposits accepted by the Company and sums remaining unpaid on such amount with the interest payable thereon along with the arrangements made for such repayment

Repay within one year from such commencement or from the date on which such payments are due, whichever is earlier.

Yet to be notified



Components of Deposits

Deposit Trustee

Credit Rating for Public Companies

Deposit Insurance

Deposit Receipts

Register of deposits

Deposit Repayment

Reserve



Deposit Insurance at a glance (Rules WEF 01.04.2014) Every Company shall enter into a deposit insurance contract at least 30 days before the issue of circular or advertisement or at least 30 days before the renewal

The deposit insurance contract shall specifically provide that in case of default of repayment, the depositor is entitled to principal + interest amount as per the Contract

Every Depositor can be assure of INR 20,000 in case the Company makes any defaults

The Company should not charge the premium paid on insurance on its deposit holders.



Trigger Points ( Rules WEF 01.04.2014)

A sum equal to 15 % of deposit maturing during the Financial Year and the following Financial Year shall be kept in a scheduled bank on or before 30th April every Year , in the name of Deposit Repayment Reserve Account

The entries shall be made within seven days from the date of issuance of the receipt duly authenticated by the authorities., in the register

The deposit receipt need to be given with in 21 days from the date of receipt of money or realization of cheque or date of renewal

Every Company should file the returns in e form DPT – 03 with the Registrar on or before 30th June every year



A short note on the procedure for obtaining deposits ( Rules WEF 01.04.2014) Shareholder’s Approval

Approval From Members/Others

Secured or Unsecured

Circular to all Shareholders

Provision of Deposit Insurance

Creation of Deposit Repayment Reserve Account

Appointment of trustee for depositors

Entry in the Register of Deposits

Creation of Security

Return on Deposits to be filed with ROC



Impact on the Industry



Impact on the Industry ( Cond.)

The following Companies will be affected dreadfully on commencement of this Act

Name of the Company Approx Amount of Deposit (Fig in Crores) as on 31st March 2013

JaiPrakash Associates Ltd 2355.57

United Spirits Limited 435



Reach us

Chennai Indira Devi Complex, II Floor, # 20 Gopalakrishna Street, Pondy Bazaar, T. Nagar, Chennai – 600 017, TN, India. RMS Apts, Door No 16, 3rtd Floor, No. 12, Gopalakrishna St, Pondy Bazaar, T Nagar, Chennai- 600 017, TN, India Tel: +91 44 2815 2673/ 2815 2674, Email: [email protected]

About SAS PARTNERS;

Over 10 years of market presence and serving more

than 200 businesses from diversified industries

Divisions : Regulatory Advisory & Support division and

Transaction & Consulting division.

Versatile professional team over 25 professionals

comprising of Company Secretaries, Legal, Finance, and

Business Professionals

Deep rooted entrepreneurial, professional and

regulatory relations

ISO 9001:2008 Certification by TUV SUD

Regulatory Advisory & Support division

Corporate Secretarial

Capital Markets

Foreign Exchange Management

Intellectual Asset Management

Due Diligences

Soy Joseph , ACS, ACIS (UK) BL

Sr Partner – Corporate Regulatory +91 (0) 988421 2845 [email protected]

Sony George Mathew, MBA, LLB, ACS

Partner – Corporate Regulatory +91 (0) 98846 56382 [email protected]

Bangalore C – 1, Le Chateau Apartments, No. 90, Infantry Road, (Opposite to Shafina Plaza) Bangalore – 560 001 Tel: +91 98846 56382 Email: [email protected]

presentation on acceptance of deposits under companies act, 2013

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