{"id":16170,"date":"2019-05-05T10:00:37","date_gmt":"2019-05-05T04:30:37","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=16170"},"modified":"2023-03-31T12:51:04","modified_gmt":"2023-03-31T07:21:04","slug":"mca-requires-reporting-on-what-is-not-deposit","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/mca-requires-reporting-on-what-is-not-deposit\/","title":{"rendered":"MCA Requires Reporting on \u201cWhat is not DEPOSIT?\u201d"},"content":{"rendered":"<p class=\"has-drop-cap\">Recently MCA has issued a notification <strong>dated 22<sup>nd<\/sup> January 2019<\/strong> effective from the same date in which the authority has made certain amendments which is of much significance in the <strong>Companies (Acceptance of Deposits) Rules, 2014<\/strong>.Companies finds that funds obtained by the way of deposits from their members and others play a useful part in supplementing their need of resources for the revenue expenses. Deposits can be a secured or unsecured borrowing. Firstly, let&rsquo;s understand &ldquo;what is deposit? and what is not deposit?&rdquo;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What\nis Deposit?<\/strong><\/h2>\n\n\n\n<p>Deposit is a sum of money paid into a bank it also refers to a part of funds used as security for the delivery of services. Company place funds into an account to increase the credit balance of the Company&rsquo;s Account and to meet out the working capital.<\/p>\n\n\n\n<p>Deposits are of 2 kinds-<\/p>\n\n\n\n<ul><li>Acceptance of Deposits from the Members-A Company (Private or Public) can accept deposits from its member.<\/li><li>Acceptance of Deposits from the Public-Only a Public company having a net worth of not less than 100 crore or a turnover of not less than 500 Crore can accept deposits from the Public. Such company be referred to as a &lsquo;<strong>ELIGIBLE COMPANY&rsquo;<\/strong><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is not Deposit?<\/strong><\/h2>\n\n\n\n<p>The sum of money which do not fall within the ambit of the definition of <a href=\"https:\/\/enterslice.com\/learning\/acceptance-of-deposit-companies-act\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"deposits under the Companies Act 2013 (opens in a new tab)\">deposits under the Companies Act 2013<\/a> are-<\/p>\n\n\n\n<ul><li>Loans taken by a\ncompany from another company;<\/li><li>Non-interest-bearing\namount received and held in trust;<\/li><li>Any amount\nreceived from a person who at the time of receipt of amount was the director of\nthe company and a declaration was received by the director to the company.<\/li><li>Amount received\nfrom an employee of the company i.e. employee security deposit.<\/li><li>Unsecured loans\nfrom the promoters(Any amount brought in by the promoter)<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Section\nUsed and Their Applicability<\/strong><\/h2>\n\n\n\n<p>Sections 73 to 76A of Companies Act, 2013 provide the provisions related to acceptance of deposits;<\/p>\n\n\n\n<ul><li>From members by private companies. (Section 73)<\/li><li>From persons other than members by public companies-(Section 76) and.<\/li><\/ul>\n\n\n\n<p>The authority\nhas made certain amendments by introducing New section 76A i.e .When a company\naccepts or invites any other person to accept or invite on its behalf any\ndeposits in contravention of the manner prescribed under section 73&amp; 76 or\nif the company fails to repay the deposit or part of it- <\/p>\n\n\n\n<p>The company\nshall in addition to the payment due and the interest thereon shall be\npunishable which shall not be less than 1 crore rupees or twice the amount of\ndeposits, whichever is lower, but which may extend to 10 crores.<\/p>\n\n\n\n<p>Every officer involved and is in default shall be punishable with imprisonment which may extend to 7 years\/and fine which shall not be less than 25 lakh rupees with maximum extension to 2 crore rupees. (Section 76A)<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance of the Amendments<\/strong><\/h2>\n\n\n\n<p>As per the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Amendment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An &amp;quot;amendment&amp;quot; refers to the formal change or correction of a legal document, often involving additions, variations, or deletions to address irregularities or clarify points in an agreement.(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/amendment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>amendment<\/a> the companies are required to file return in terms of reporting to the <a href=\"http:\/\/www.mca.gov.in\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Registrar of Company (opens in a new tab)\">Registrar of Company<\/a> &ndash; <\/p>\n\n\n\n<ul><li><strong>One Time Return<\/strong><\/li><\/ul>\n\n\n\n<p>The company will file one time return which\nwill give the details of the outstanding receipt of money\/loan which has not\nbeen considered as Deposits as per the rule 2(1)(c) of the rules and the\nreporting has to be made by the company within 90 days of the said publication\ni.e. 22<sup>nd<\/sup> January 2019.<\/p>\n\n\n\n<ul><li><strong>Periodic Return<\/strong><\/li><\/ul>\n\n\n\n<p>The company will give the details of particulars of transaction which are not considered as deposits within 30<sup>th<\/sup> June of every year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Functions to be Performed by the Company<\/strong><\/h2>\n\n\n\n<p>A Company by passing ordinary resolution may accept deposits from its members subject to the fulfillment of following conditions-<\/p>\n\n\n\n<ul><li><strong>Issuance of Circular to the Members and RoC<\/strong><\/li><\/ul>\n\n\n\n<p>A circular shall be issued to the members and the same must be filed along with the statement with the registrar within 30 days before the date of the issuance of the circular and the statement should reflect-<\/p>\n\n\n\n<p>a. Financial position of the company<\/p>\n\n\n\n<p>b. Credit Rating obtained by the company<\/p>\n\n\n\n<p>c. Details of Existing Depositors<\/p>\n\n\n\n<p>d. Amount due to existing Depositors.<\/p>\n\n\n\n<ul><li><strong>Maintenance\nOf Liquid Fund<\/strong><\/li><\/ul>\n\n\n\n<p>Every company falling under the provision shall deposit on or before the 13<sup>th<\/sup> day April each year, such sum which shall not be less than 20% of the amount of its deposits maturing during the financial year by opening a separate account in a scheduled bank termed as &ldquo;<strong>Deposit Repayment Reserve Account<\/strong>&rdquo;.<\/p>\n\n\n\n<p><\/p><div class=\"shadow1\"><strong>DISCLAMER\nCLAUSE<\/strong>-The\nregistrar or Central government does not take any responsibility either for the\nfinancial soundness of any deposit scheme or deposits which is being accepted\nor invited for the correctness of the statement made in the circular in the\nform advertisement.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Companies Covered under the Amendments<\/strong><\/h2>\n\n\n\n<p>Excluding the Government Companies, the amendments will cover almost all the companies i.e. Public or Private companies as almost all the receipts of money falls under the list of Rule 2(1)(c). The central government has specified to certain class \/companies to whom the provisions shall not apply. The receipts which are excluded from the rule 2(1) (c) are as mentioned below-<\/p>\n\n\n\n<div class=\"shadow1\"><ul><li>Amount from\nGovernment-Any amount received by the government(Central or state ,any local\nauthority)<\/li><li>Amount from\nForeign Governments-includes foreign or international banks and resident\noutside India.<\/li><li>Loan from\nBanking Company\/PFI-Any banking company, co-operative banks, PFIs, Insurance\nBanks.<\/li><li>Commercial\nPapers-Any amount received against issuance of commercial paper.<\/li><li>Inter Company\nLoan-Any amount received by any other company.<\/li><li>Share\nApplication Money-Advance towards <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Allotment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An allotment is the systematic distribution of business resources, often pertaining to the distribution of shares during initial public offerings (IPOs) to underwriting firms or to new and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/allotment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>allotment<\/a> <\/li><li>Amount from\nDirectors<\/li><li>Bonds or\nDebentures<\/li><li>Amount accepted\nby the Nidhi company<\/li><li>Unsecured Loans\nfrom the promoters<\/li><li>Employee\nsecurity deposits<\/li><li>Trusts<\/li><li>Suppliers.\nSecurity deposits\/Capital Advances<\/li><\/ul><\/div>\n\n\n\n<p class=\"has-background has-cyan-bluish-gray-background-color\"><strong>Note <\/strong><em>As mentioned above,Banking companies and NBFCs are not required to fulfill the compliances of the provisions related to acceptance of Deposits as per the provisions of Section 73 of Companies Act 2013.<\/em><\/p>\n\n\n\n<p><strong>It also excludes amount accepted by-<\/strong><\/p>\n\n\n\n<ul><li>Chit Fund Company<\/li><li>Collective Investment Scheme<\/li><li>Start-Up Company<\/li><li>Alternate Investment Funds<\/li><li>Domestic Venture Capital Funds<\/li><li>Infrastructure Investment Trusts<\/li><li><a href=\"https:\/\/enterslice.com\/registration-of-mutual-fund-with-sebi-india\">Mutual Funds Registered With SEBI<\/a><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Period of Acceptance of Deposits<\/strong><\/h2>\n\n\n\n<p>The minimum and maximum period of Deposits is-<\/p>\n\n\n\n<ul><li><strong>Minimum Period<\/strong>-6 months not exceeding 10% of (PSC + Free Reserve and Security Premium Account) repayable after 3 months.<\/li><\/ul>\n\n\n\n<p>Exception-Short term Deposits.<\/p>\n\n\n\n<ul><li><strong>Maximum Period<\/strong>-36 months.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Return of Deposits<\/strong><\/h2>\n\n\n\n<p>Every Company Shall File A Return of Deposits in <strong>FORM DPT-3<\/strong> with the roc on or before <strong>30<sup>th<\/sup> June of every year<\/strong> which shall be duly certified by the auditors of the Company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p>It is clarified by MCA that such amounts received by the private companies prior to 1<sup>st<\/sup> April 2014 shall not considered as deposits as per the companies Act 2013 subject to the condition that such private companies shall disclose in the notes to its financial statement for the financial year commencing on or after 1<sup>st<\/sup> April 2014.The amendment has been made to know to what extent the ROC were successful on obtaining the required details and will benefit them from getting those information on a regular&nbsp; <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a> at one place. In the new reporting requirements, the companies will have to disclose details of all these transactions even though the same are not deposits.<\/p>\n\n\n\n<p><strong>Also Read:<\/strong> <a href=\"https:\/\/enterslice.com\/mca-compliance-for-insurance-company\">MCA Compliance for Insurance Company<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently MCA has issued a notification dated 22nd January 2019 effective from the same date in which the authority has made certain amendments which is of much significance in the Companies (Acceptance of Deposits) Rules, 2014.Companies finds that funds obtained by the way of deposits from their members and others play a useful part in [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":16189,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2369],"tags":[2545],"acf":{"service_id":"27"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>MCA Requires Reporting on \u201cWhat is not DEPOSIT?\u201d - Enterslice<\/title>\n<meta name=\"description\" content=\"MCA requires reporting on What is not deposit,Recently MCA has issued a notificationdated 22nd January 2019 effective from the same date in which the\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/mca-requires-reporting-on-what-is-not-deposit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MCA Requires Reporting on \u201cWhat is not DEPOSIT?\u201d - Enterslice\" \/>\n<meta property=\"og:description\" content=\"MCA requires reporting on What is not deposit,Recently MCA has issued a notificationdated 22nd January 2019 effective from the same date in which the\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/mca-requires-reporting-on-what-is-not-deposit\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-05-05T04:30:37+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-31T07:21:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/MCA-Requires-Reporting-on-What-is-not-DEPOSIT.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Narendra Kumar","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/nk-1.jpg","authorDescription":"Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.","postViews":518,"readingTime":4,"nextPost":{"id":16231,"slug":"10-benefits-of-outsourcing-accounting-services"},"prevPost":{"id":16191,"slug":"changes-in-utilization-of-input-tax-credit-under-the-gst-act"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/MCA-Requires-Reporting-on-What-is-not-DEPOSIT.png","postTerms":"Compliances","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/16170"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=16170"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/16170\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/16189"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=16170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=16170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=16170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}