CS DIVESH GOYAL

Mob: +918130757966

Practicing Company Secretary

csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

DEPOSITS
DEPOSIT UNDER COMPANIES ACT, 2013
GOYAL DIVESH & ASSOCIATES,
Practicing Company Secretary
SeriesSeries- 44

SERIES
NO- 44

Deposits are crucial Topic under Companies Act, 2013. As the month of March is on its end,
most of the companies which have taken loan earlier under the companies act 1956 and have
filed DPT-4 in this Financial year declaring that the companies has such and such amount of
deposits as on 31.03.2014, are now required to repay such loan on or before March 31, 2015
under Section 74(1)(b) otherwise those companies which shall not repay the amount within
the prescribed time period, shall be punishable under section 74(3) and the penalty is so much
swerve that it has brought the wrinkles on heads of officers of the companies.
Have a serious look into what is stated herein with your skillful application of mind. Section 74
of the Companies Act, 2013, provides that any deposit accepted before the commencement of
the Companies Act, 2013, needs to be repaid/refunded on or before 31st March 2015. The said
section also states that a return has to be filed with ROC in respect of existing deposits.
New Section 74 of the companies Act, 2013 the relevant portion of which is as under:
(1) Where in respect of any deposit accepted
accepted by a company before the commencement of this
Act,
Act the amount of such deposit or part thereof or any interest due thereon remains unpaid on
such commencement or becomes due at any time thereafter, the company shall(a).
(b) repay within one year from such commencement or from the date on which such payments
are due, whichever is earlier.

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CS DIVESH GOYAL
Practicing Company Secretary

Mob: +918130757966
csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

Rule 2(b) of the Companies (Acceptance of Deposits) Rules, 1975 the relevant provision of
which is as under:
deposit means any deposit of money with, and includes any amount borrowed by, a
company, but does not includeinclude
(ix) any amount received by a private companies from a person who, at the time of the receipt
of the amount, was a director, relative of director or member

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CS DIVESH GOYAL
Practicing Company Secretary

Mob: +918130757966
csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

In the Earlier Companies Act, 2013, Private Company could accept deposits from the following
Sources as per above definitions:
a) Receiving of Money from the Directors
b) Receiving of Money in the form of Share Application money.
c) Receiving of Money from the Relative of Directors and Members.
d) Receiving of Money as Advanced from the Customers.
Lets discuss on above mention points:
A.

RECEIVING OF MONEY FROM THE DIRECTORS:

As per Sub rule (viii) Rule-2 of Acceptance of Deposits by Companies Rules, 2014, Deposit
doesnt include: Any amount received from a person who, at the time of the receipt of the
amount, was a director of the Company.
So as per sub rule (viii) All the Companies including private limited company are allowed to
accept loan from the directors of the Company. Condition: Director 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.

B. RECEIVING OF MONEY IN THE FORM

FORM OF SHARE APPLICATION MONEY:
There are two situations:

I.

i.

Share application money received before 1st April, 2014.

ii.

Share Application money received after 1st April, 2014.

Share application money received before 1st April, 2014:

As per ICSI FAQs No. 126

Share Application money with the company in excess of 2 months is treated as Deposit
under Companies Act, 2013. Would Share Application money in excess of 2 months
existing on 31st March 2014, be termed as deposit?

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CS DIVESH GOYAL
Practicing Company Secretary

Mob: +918130757966
csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

The Share Application money lying with companies as on 31st March 2014 may not be
termed as deposit in case the same is repaid within 2 months i.e. upto 31st May, 2014.
Else the same would also be termed as deposit.
Bare Act Language:
As per Sub rule (vii) Rule-2 of Acceptance of Deposits by Companies Rules, 2014: Any amount
received as Share application money for issue of securities. Such securities should be allotted
within 60 days from the receipt of Share application money.
VIEW:
As per the ICSI, FAQ If any company have pending share application money as on 1st April
2014 irrespective of date of receipt of Share Application Money. The Company has Two
months upto 31st May, 2014 for allotment of shares.
If Company doesnt allot shares for such Share application money upto then

Such amount will be treated as deposits, and

Required to file DPT-4, and

Repay before 31st March, 2015

II.

Share application money received after 1st April, 2014:

If Share Application money received after 1st April, 2014 then As per Sub rule (vii) Rule-2 of
Acceptance of Deposits by Companies Rules, 2014: Any amount received as Share application
money for issue of securities. Such securities should be allotted within 60 days from the receipt
of Share application money and if company fails to allot shares within 60 days of receipt of
money then company requires refunding same to subscribers within 15 days of expiry of 60
days.
If company fails to allot shares and refund money then such money will be considered as
Deposits.
C.

RECEIVING OF MONEY FROM THE RELATIVES OF DIRECTORS & MEMBERS:

There are two views of professionals for the amount received by the Private Limited
Companies before 1st April, 2014 from the Relatives of Directors and Members of Company.
Views:
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CS DIVESH GOYAL
Practicing Company Secretary

Mob: +918130757966
csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

i.

Above Money will not treat as Deposits.

ii.

Above Money will treat as Deposits.

I.

ABOVE MONEY WILL NOT TREAT AS DEPOSIT:

a) Section 74(1) of the Companies Act, 2013 is using the words any deposit accepted
by a company before the commencement of this Act. Thus before the Companies Act,
2013 if a company has accepted any deposit under the Companies Act,1956(which
was in existence prior to 2013 Act), the same needs to be repaid as per the mandate
of section 74(1)(b) on or before 31st March,2015.
b) Therefore, all the monies received from relatives of Directors and members of a
private company including the amounts stated in (i) to(xii) of clause (b) of rule 2 of
the Companies (Acceptance of Deposits) Rules,1975 on or before the commencement
of companies Act,2013 are not required to be repaid as they were not deposit when
accepted. Crux of Section 74 lies in the fact that when the amount received whether
the same was deposit or not.

The provisions of Section 74 of the Companies Act are applicable only to deposits which were
accepted in accordance with the provisions of section 58A of the Companies Act, 1956 read
with Companies (Acceptance of Deposits) Rules, 1975. Unfortunately due to misinterpretation
of Section 74 many unnecessary returns have been filed with ROC and the same is being
pressed to be filed again.
II.
II.

ABOVE MONEY WILL TREAT AS DEPOSIT:

In the safer side many professionals have view that any amount received from the relatives
of directors and members even before 1st April, 2014 will be considered as deposits under
Companies Act, 2013. Therefore following compliances will be required to be done by
Companies:

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CS DIVESH GOYAL
Practicing Company Secretary

Mob: +918130757966
csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

File DPT-4

Repay before 31st March, 2015

But the question if company not able to repay the same. As per me following are the way outs:
1. The Companies, which have filed DPT-4, should repay the whole amount before the end of this
month as the companies have already declared that the amount was a deposit and hence, need
to repay such amount as per Section 74(1)
2. Wait for any clarification to be issued by the Ministry in this regard but caution it can be too
late for those corporate, if no clarification being issued or if issued, is not in favour of
corporate.
3. The Best option is to file an application with Tribunal/ Company Law Board before March 31,
2015 under section 74(2)for getting further time for the repaying the deposit amount. As once,
the application is being filed; the company may get the time till the time CLB gives any order.
And The extension to be given by CLB depends upon the financial position of the company, the
efforts taken up by the company during the year in repayment of deposits, further efforts taken
by the company in repayment of balance deposits etc. as we have seen in a high profile
company case that the extension has been given only for 6 months and that only in case when
the company has repaid back the substantial part of its deposits and have applied to the Bank
for obtaining loan with which the balance deposit shall be repaid.
D. RECEIVING
RECEIVING OF MONEY AS ADVANCED FROM THE CUSTOMERS.
Bare Act Language:
As per Sub rule (xii) Rule-2 of Acceptance of Deposits by Companies Rules, 2014: Any amount
received as advances from the customers. Such work should be done within 365 days from the
receipt of Share application money otherwise company have to repay such amount to the
customer before expiry of 365 days.
If company fails to repay within 365 days then such amount will be considered as deposits.
VIEW:
If any company has advance money as on 1st April 2014 irrespective of date of receipt of
Money received. The Company has 365 days upto 31st March, 2015 for repayment of same..
If Company doesnt refund such Advance money then

Such amount will be treated as deposits, and

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CS DIVESH GOYAL

Mob: +918130757966

Practicing Company Secretary

csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

Required to file DPT-4, and

Repay before 31st March, 2015]

FAQS
S. No.
A.

QUESTION & ANSWERS

If the deposit is due within 6 month of Commencement of the Act, 2013, then what is the
time period for the payment of deposit?
As per Transition period of given by the Act for repayment of deposits.
Than Company will be entitled to repay deposits within one year of commencement. In this
case the company gets an additional period of 6 months

B.

What is the Last date of repayment of deposits accepted before commencement of the 2013,
Act?
All the deposits accepted before commencement of the act 2013 are required to be repaid
no later than one year from the date of commencement of the 2013, Act.

C.

If deposits accepted before commencement of the 2013, Act not fallen for due and for re
payment then what is the last date of repayment of same?
All the deposits accepted before commencement of the act 2013 are required to be repaid
no later than one year from the date of commencement of the 2013, Act. Irrespective of
whether such deposits have fallen due for payment or not.

D.

If a company is regular in payment of interest/ deposits then is it mandatory to repayment

of deposits before 31.03.2015?
Irrespective of whether company is regular in payment of interest/ deposits its mandatory
to repayment of deposits before 31.03.2015

E.

Whether deposits accepted prior commencement of Companies Act, 2013 can be renewed
or not?
Deposits accepted prior to the commencement of the 2013 Act, need to be communicated to
the Registrar and they cannot be renewed. Such deposits are required to be repaid within
one year of commencement of the 2013 Act.

F.

If a person ceases or resign from the post of director after giving loan then such loan will be
considered as deposits or not?
Requirement of director will be check at the time of receipt of amount. Thus, later he may
cease to be a director.

G.

If deposit in the joint name of director and other person then how it will be treated?
A deposit in joint names of director and another person, who may or may not be director
should be permissible, if name of director is first depositor, though there is no specific

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CS DIVESH GOYAL
Practicing Company Secretary

Mob: +918130757966
csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

provision.
H.

Borrowings which are excluded from the definition of Deposits?

 Amount from government and guaranteed by government.
 Amount received from foreign government or foreign Bank.
 Loan from banks and FI.
 Amount received against commercial paper.
 Inter corporate borrowing.
 Subscription to securities and call in advance.
 Amount from Directors.
 Secured Bonds/debentures.
 Convertible bonds/debentures.
 Non-interest bearing security deposit from employee.
 Amount in trust.
 Advance and security deposit received by company.
 Unsecured loans from promoters.
 Amount accepted by Nidhi Company.

INTER CORPORATE BORROWING:

As per definition of deposit Inter corporate borrowings doesnt fall under preview of deposits. Therefore
if a company wants fund then Company can take Loan from other company such loan will not treat as
deposits.
Any amount received by a company from another company is not deposit. Thought there is no
restriction on the company borrowing the money, the lending company has to observe limits of lending
as specified in section 186 of Companies Act,. 2013.
Check: Before giving any Inter Corporate Loans check the applicability of Section 185 on such
transaction. (Like: If director of lending company is director or member of borrowing Company then
inter corporate loans not allowed, such loan fall under category of Loan to director)
AMOUNT FROM DIRECTORS:
DIRECTORS:
Any amount received from a person who was director of the company at the time of receipt of the
amount is not deposit.
Condition: The director should declare in writing that the money he is depositing is not borrowed or
accepting loans or deposits from others.
UNSECURED LOANS FROM PROMOTERS:
PROMOTERS:
Unsecured loans brought by promoters or relatives in pursuance of stipulation of financial institutions
or bank. However, after the loan is repaid the Banks/FI, the amount from promoters or their relatives
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CS DIVESH GOYAL

Mob: +918130757966

Practicing Company Secretary

csdiveshgoyal@gmail.com

GOYAL DIVESH& ASSOCIATE

will be treated as deposit.

S. No.
A.

Particular

Time Period of Repayment

If the deposits f all due for repayment Then maximum time period for repayment
after

one

year

after

the will

commencement of 2013 Act.

B.

one

year

from

the

date

of

commencement of 2013 Act.

If deposits fall due for repayment Then maximum time period for repayment
within

one

year

after

the will

commencement of the 2013 then.

C.

be

be

one

year

from

the

date

of

commencement of 2013 Act.

If the repayment of deposits are over Then the deposits shall be repaid within a
due by less than one year before the period of one year from such commencement
date of commencement of the 2013 or one year from the date deposits fell due for
Act.

repayment whichever is earlier and hence the

maximum time period may be less than one
year from the date of commencement of the
Act.

Distinction between Loan and Deposits:

For the Purpose of provisions of public deposits, all borrowings are deposits unless excluded
In V srinivas v. Saraswathi Finance Corporation (2002), It was observed, While a loan
may include deposit, every loan is not a deposit.
In Sharda Talkies Firm V. Smt Madhulata Vyas AIR 1996, it was held that there is subtle
distinction between a deposit and a loan. In case of loan, the amount is given by creditor
to debtor at the request of and for requirements and dues of the debtor under certain
terms and conditions, In case of a deposit; the depositee receives money at the instance
of depositor. In case of loan, the debtor has to request the creditor to advance certain
amount for meeting his requirements.

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from
Delhi and can be contacted at csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this
document have been prepared on the basis of relevant provisions and as per the information
existing at the time of the preparation. Though utmost efforts has made to provide authentic
Contact
csdiveshgoyal@gmail.com
For Any
Query Or Question
Suggestionsthe relevant
information,
it isOn
suggested
that to have better
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kindlyOr
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