The Ministry of Corporate Affairs (MCA), vide its Notification dated September 15, 2015, has amended the Companies (Acceptance of Deposits) Rules, 2014 (hereinafter referred to as 'Rules'). By the amendment, MCA has excluded from the definition of 'Deposits' (as provided under Rule 2 of the Rules) the amount of money received from a person who, at the time of the receipt of the amount, was a relative of the Director of the Private Company.
This exclusion is subject to the following two conditions:
a. The relative from whom the money is received, furnishes to the company at the time of giving 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
b. The company shall disclose the details of money so accepted in the Board's report.
Prior to this amendment, the amount received from the director of any company was only excluded from the definition of 'Deposits'. Meaning thereby, the amount received from any relative of a director of the private company, was taken under the loop of the Deposits and subsequently these Rules applied on such amount. As of now, via this amendment by the MCA, the private companies may accept money from the directors as well as their relatives, without complying with the deposit Rules in respect of such amount.
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