The Ministry of Corporate Affairs vide its notification dated
June 29, 2016 has issued the Companies (Acceptance of Deposits)
Amendment Rules, 2016. These rules shall come into force on the
date of their publication in the Official Gazette. These rules have
made certain pertinent changes to the provisions applicable to the
acceptance of deposits. Exclusions from the definition of
'Deposits' now include - compulsory convertible bonds or
debentures convertible within a period of ten years, any amount
raised by issue of non-convertible debenture, non-interest bearing
amount held in trust, amount received in the course of business as
an advance for providing future services in the form of a warranty
or maintenance contract, amount received by the company under any
collective investment scheme in compliance with regulations framed
by the Securities and Exchange Board of India, amount equal to or
exceeding twenty five lakh rupees received by a start-up company by
way of a convertible note, amount received by a company from
Alternate Investment Funds, Domestic Venture Capital Funds and
Mutual Funds etc.
Limits for accepting deposit from members of a public company has
been increased from '25%' to '35%'. Private
companies may accept deposits from members up to 100% of paid up
share capital, free reserves and securities premium account.
Additionally, requirements have also been imposed for disclosure of
deposits in notes to accounts of private companies and disclaimer
to be given in advertisement for inviting deposits.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
