Transcript Companies Act, 2013 Analysis of 98 sections effective 12

Companies Act, 2013
Analysis of 98 sections
effective 12.09.2013
Varma & Varma
Companies Act, 1956
Companies Act, 2013
• It was introduced on 1st
 Companies Bill passed by
• It has 658 Sections and 15

April, 1956.
Schedules.
• It extends to the whole of
India (Sikkim has its own
Companies Act).



the Lok-Sabha on 18th
December, 2012.
Rajya Sabha passed it on 8th
August, 2013 by voice vote
29th
August-President’s
Assent; 30th August-Gazette
Notification
The Bill has 470 Clauses (309
pages), 29 Chapters, 7
Schedules and 29 Rules
It applies to the whole of
India.
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Chapter – I
Preliminary
• Sections ranging from 1 to 2
• Total 2 sections
• On 30th August 2013, Ministry of Law and Justice issued
a notification regarding the Companies Act, 2013
immediately after it received assent of President of
India. Only section 1 of the Act of 2013 came into
effect from that day. Section 1 as usual deals with short
title, extent, commencement and application
• The 2nd section deals with the definition clauses
• Out of 95 definitions, 83 definitions (in which 26 are
new definitions) have been notified w.e.f. 12.09.2013
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Definitions-Section 2
• The following definitions given against each clause, become
applicable:
1: abridged prospectus
3: alteration
4: appellate tribunal
5: articles
6: associate company
8: authorised capital (new)
9: banking company
10: board of directors or board
11: body corporate or corporation
12: book and paper and book or paper
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Definition Continued……
14: branch office
15: called-up capital (new)
16: charge (new)
17: chartered accountant (new)
18: chief executive officer (new)
19: chief financial officer (new)
20: company
21: company limited by guarantee
22: company limited by shares
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Definition Continued….
24: company secretary
25: company secretary in practice
26: contributory
27: control (new)
28: cost accountant (new)
29: Court (except sub clause iv which talks
about special courts)
30: debenture
32: depository
33: derivative
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Definition Continued
34: director
35: dividend
36: document
37: employees’ stock option
38: expert (new)
39: financial institution (new)
40: financial statement (new)
43: free reserves
44: global depository receipt (new)
45: government company
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Definition Continued
46: holding company
49: interested director
50: issued capital (new)
51: key managerial personnel (new)
52: listed company
53: manager
54: managing director
55: member
56: memorandum
57: net worth
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Definition Continued
58: notification (new)
59: officer
60: officer who is in default
61: official liquidator
63: ordinary or special resolution (new)
64: paid up share capital (new)
65: postal ballot (new)
66: prescribed
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Definition Continued….
68: private company
69: promoter (new)
70: prospectus
71: public company
72: public financial institution
73: recognised stock exchange
74: register of companies (new)
75: registrar
76: related party
77: relative
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Definition cont…….
78: remuneration
79: schedule
80: scheduled bank
81: securities
82: securities and exchange board
84: share
86: subscribed capital (new)
87: subsidiary company or subsidiary
(except the proviso and explanation (d))
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Definition Continued
88: sweat equity shares
89: total voting power
90: tribunal (new)
91: turnover (new)
92: unlimited company (new)
93: voting right (new)
94: whole time director (new)
95: words & expressions borrowed from
SCRA, SEBI and Depositories Act…
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Chapter – II
Incorporation
• Sections ranging from 3 to 22
• Total 20 sections
• Out of which 3 sections have been made
applicable from 12.09.13
• The notified sections are 19,21,22.
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Subsidiary Co. not to hold shares in its
holding Company
Old Act (corresponding 42)
New Act (section 19)
• Subsidiary company shall • Membership of holding
not hold shares in its
company –No major change
holding
company
(exceptions provided in
19(1)(a),(b),(c)) and
• No holding company shall
allot or transfer its shares to
any of its subsidiary
companies.
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Authentication of documents,
proceedings and contracts
New Act (section 21)
Old Act (corresponding 54)
• A document or proceeding
or contract may be signed
by any KMP or an officer
duly authorised by the
Board in this behalf
• Authentication
of
documents and proceedings
• A document or proceeding
requiring authentication by
the company may be signed
by a director, manager,
secretary
or
other
authorised officer of the
company
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Chapter – III
Prospectus & Allotment of Securities
• This chapter is divided into 2 parts
• Part I – Public Offer and Part II – Private
Placement (Effective from 1-4-2014)
• Sections ranging from 23 to 42.
• Total 20 sections.
• Out of which 15 sections have been made
applicable from 12.09.13, all in Part I
• The notified sections are 23, 24, 25, 29, 30, 31,
32, 33, 34, 35, 36, 37, 38, 39 and 40
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Public offer and pvt. placement
New Act (section 23)
• It provides the ways in which:
Public company or a
Private company
may issue securities.
• It is to be noted here that
23(1)(b) and 23(2) effective
from 1-4-2014.
• 23(1)(b): Private placement of
shares by public companies
• 23(2): Issue of shares by
private companies
Old Act (NEW provision)
• This is a new provision and
no corresponding section
could be found.
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Doc containing offer of sec. for sale to
be deemed prospectus –Section 25
• Any document by which the offer for sale of
securities (under the old Act shares) is made to
the public, shall be deemed to be a prospectus
and all sections as applicable to prospectus, shall
be applicable to it.
• It is to be noted that section 25(3) is effective
from 1-4-2014.
• This sub section brings out additional information
required to be mentioned in addition to matters
specified in S. 26 of the Act such as amount
received, pricing etc.
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Public Offer of Securities to be in De-materialised form
– Section 29 & Rule 9 of Companies (Prospectus &
Allotment of Securities) Rules, 2014
• Applicable to every company making public offer
and such other class of public companies as may
be prescribed
• Other companies may issue securities in physical
or demat form
• Under the old Act, same was applicable to every
listed company making an initial public offer of
any security for a sum of Rs 10 Crores or more
• As per Rule 9 promoter of public companies
making public offer shall hold shares only in
dematerialized form.
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Advertisement of Prospectus Section 30
• Advertisement of Prospectus published shall
specify the contents of its MOA:
– Objects
– Liability of Members
– Amount of Share Capital
– Subscriber Details
– Capital Structure
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Red Herring Prospectus (RHP) –
Section 32
• RHP may be issued prior to issue of Prospectus
• RHP to be filed with ROC at least 3 days prior to
opening of subscription list and the offer.
• Upon closing of the offer, the details of information to
be filed with ROC and SEBI such as total capital raised,
other information not included in red herring
prospectus.
• Red herring prospectus means a prospectus which
does not include complete particulars of the quantum
or price of the securities.
• Under the old Act, Section 60B referred to this matter
ie information memorandum.
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Punishment for Fraudulently inducing
persons to Invest money
New Act (section 36)
• Persons who fraudulently
induce persons to invest
money shall be liable for
action under Sec 447
(Punishment for Fraud)
• This
includes
any
agreement with a view to
obtaining credit facilities
from bank or financial
institutions.
• A
non
compoundable
offence
Old Act(Corresponding 68)
• Bank
and
Financial
Institutions
were
not
covered
• It was a compoundable
offence
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Action by Affected Persons (Sec 37)
•
•
•
•
New Section
A suit may be filed or
Any other action may be taken
U/s 34 (Criminal liability), 35(Civil liability) or 36
(fraudulently inducing persons to invest money)
• By any person, group of persons or any
association of persons
• Affected by any misleading statements, inclusion,
omission of any matter in the prospectus
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Punishment for Personation for
Acquisition etc of Securities
New Act (section 38)
• Punishment u/s 447 (Fraud)
for persons who apply in
fictitious names, multiple
applications
• Court may order disgorgement
of gains, if any and seizure and
disposal of the securities
• The amount so received by the
court to be credited to the
Investor
Education
and
Protection Fund.
Old Act(Corresponding 68A)
• Disgorgement
provisions
were not there earlier
• Multiple applications in
different names or in
different combinations were
not included earlier
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Allotment of Securities by Companies
New Act (section 39)
Old Act(Corresponding 69 & 75)
•
• Prohibition of Allotment
unless
Minimum
Subscription Recd (Sec 69)
• Return as to Allotments (Sec
75)
• Only pertaining to Shares
•
•
•
Where no minimum amount has
been subscribed within 30 days
from the date of issue of
prospectus then money received
against the application needs to be
refunded to all applicants within 15
days from closure of the issue (Rule
11)
Co. having a share capital, on
allotment of securities (earlier only
shares)
shall file a return of
allotment with ROC
Rs 1000/- penalty for each day of
continuing default.
Share application money should be
in cheque or other instruments. No
cash is allowed (S 39(1)).
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Chapter – IV
Share Capital & Debentures
• Sections ranging from 43 to 72
• Total 30 sections
• Out of which 12 sections have been made
applicable from 12.09.13
• The notified sections are 44, 45, 49, 50, 51,
57, 58, 59, 60, 65, 69 & 70
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Nature of Shares or Debentures
New Act (section 44)
• Shares or Debentures or
other interest of any
member in the company
shall be moveable property
transferable in the manner
provided in AOA
• No Change
Old Act(Corresponding 82)
• Provisions retained
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Company to accept unpaid share capital
although not called up Section 50
• Allows a Company if authorized by its AOA to
accept amounts from members which are
unpaid on the shares even though no call has
been made.
• The acceptance of such amount shall not
confer any voting rights against the amount
paid till the call has been made.
• Provisions of Section 92 of the old Act
retained.
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Payment of Dividend in proportion to
amount paid up – Section 51
• Company if authorized by AOA may pay
dividend in proportion to the amount paid up
on each share
• Provisions of Section 93 of old Act retained
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Punishment for Personation of
Security holder Section 57
• It provides penalty for a person who
deceitfully personates as the owner of any
security or interest in a company.
• Imprisonment : 1 to 3 years
• Penalty 1 lakh to 5 lakhs
• Old Act – Section 116- applies only for shares,
new act for all securities.
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Publication of Authorized, Subscribed
& Paid Up Capital - Section 60
• If a Co. publishes a notice, advertisement or
other official publications or business letters
which state the amount of Authorized Share
Capital, the Company should state in the said
document the details of the subscribed and
paid up capital.
• Penalty – Company Rs 10,000 and for officer
in default Rs 5000 for each default.
• Corresponding to Sec 148 of the Old Act.
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Unlimited Company to Provide for Reserve Share
Capital on Conversion into Limited Company – Sec 65
• Unlimited Company may be allowed to
increase its Nominal Capital provided that the
same shall not be called up except at the time
of winding up.
• Corresponding to Sec 98 of the old Act.
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Transfer of Certain Sums to CRR
Account Sec 69
• Where there is a buy back out of Free
Reserves or Share premium Account the
amount equal to nominal value of shares
bought back should be transferred to
CRR(Capital Redemption Reserve)
• The said Reserve can be used for a bonus
issue.
• Under the old Act, usage of CRR not specified.
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Prohibition for buy back in certain
circumstances – Sec 70
• No company shall buy back its own shares
-through its subsidiaries
-through investment company or group of Ics
-If default in complying in repayment of deposits, interest
thereon, redemption of debentures or preference shares.
• Buy back not prohibited if default remedied and a period of
3 years elapsed after such default ceased.
• Company shall also not buy back its own shares if non
compliance of provisions of S 92 (Filing of annual return),
S.123 (Declaration of dividend), S.127 (payment of
dividend) and Section 129 (financial statement).
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Chapter – V
Acceptance of Deposits by Companies
• Sections ranging from 73-76
• Total 4 sections effective only from 1-4-2014
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Chapter – VI
Registration of Charges
• Sections ranging from 77-87
• Total 11 sections
• Out of which only 1 section has been made
applicable from 12.09.2013
• The notified section is 86 – punishment for
contravention of provisions of this Chapter.
Corresponding to Section 142 of the old Act.
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Chapter – VII
Management & Administration
• Sections ranging from 88 to 122
• Total 35 sections
• Out of which 13 sections have been notified
from 12.09.13
• The notified sections are 91, 100, 102, 103,
104, 105, 106, 107, 111, 112, 113, 114 and
116
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Calling of Extra-ordinary General
Meeting Section 100
• The board at the requisition made by:
- Holder of 1/10 of paid up share capital or
- In case of companies not having share capital holding 1/10 of
voting power may call for EGM.
• The company may call EGM within 45 days from the date of receipt
of requisition
• If the company does not conduct EGM within 45 days,
requisitionists call EGM within 3 months from the date of
requisition.
• It is to be noted that section 100(6) relating to reimbursement of
expenses incurred by requisitionists from the fee or other
remuneration under Sec 197 payable to directors who were in
default in calling the meeting
• Corresponding to Section 169 of the old Act.
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Statement to be Annexed to Notice
Sec 102
• Notice of items of GM concerning special business
• To specify the nature of concern or interest, financial or
otherwise, if any in respect of each of the following
persons:
1. Every Director and the Manager, if any
2. Every other KMP and
3. Relatives of the persons mentioned above and
4. Also as per 102(1)(b) to give any other information and
facts that may enable members to understand the
meaning , scope and implications of the items of
business and to take decisions.
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Cont……
• 102(2)(b)-Disclosure of %age of shareholding in
any other co. under consideration to be made if
the %age of shares held in that co. is not less than
2%. As per Sec 173 of the old Act, same was 20%.
• 102(4)-In case of any benefit or profit by the
concerned Promoter, Directors, KMP etc which
accrues due to insufficient/non-disclosure, the
said person will be liable to compensate the
company as specified
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Quorum for Meetings
New Act (section 103)
• Requirement of Quorum
in
public co. changed
• Less than 1000 = 5 members
• >1000 but <=5000=15 members
• >5000- 30 Members
• 103(1)(b)- for private limited
company 2 members personally
present
• 103(2)-Where GM adjourned for
lack of quorum, the co. to give
not less than 3 days notice to
members individually or by an
advertisement in newspaper
Old Act(Corresponding 174)
• 5 members personally
present in case of public co
• 2 members personally
present for private co.
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Punishment for failure to distribute
dividends
New Act (section 127)
New Act (section 127)
• Dividend to be paid within 30
days from declaration date
• This section prescribes penalty
provisions for the directors, who
knowingly are parties to the
default
• The punishment is imprisonment
which may extend to 2 years and
with fine not less than Rs.1000
for every day of continuing
default
• 5 points have been mentioned
when no offence will be deemed
to have been committed
• The heading read as ‘Penalty
for failure to distribute
dividends within 30 days
• Provisions have been retained
• In the heading of the section,
the word ‘punishment’ has
been replaced by the word
‘penalty’
• It is to be noted that in the
new law, imprisonment has
been reduced from 3 to 2
years
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Chapter – IX
Accounts of Companies
• Sections ranging from 128 to 138
• Total 11 sections
• Out of which 1 section has been made
applicable from 12.09.13
• The notified section is 133
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Central Government to prescribe
accounting standards
New Act (section 133)
Old Act(Corresponding 211(3C))
• The CG* may prescribe the
standards of accounting or any
addendum thereto
• As recommended by the
Institute
of
Chartered
Accountants of India
• The CG would consult with
NFRA* and examine the
recommendations made by
ICAI
• CG means Central Government
• NFRA
means
National
Financial Reporting Authority
• There was a mention of the
National Advisory
Committee on Accounting
Standards
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Chapter – X
Audit & Auditors
• Sections ranging from 139 to 148
• Total 10 sections
• Out of which ‘NO’ section has been made
applicable from 12.09.13
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Chapter – XI
Appointment & Qualification of Dirs
• Sections ranging from 149 to 172
• Total 24 sections
• Out of which 3 sections have been made
applicable from 12.09.13
• The notified sections are 161, 162 and 163
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Appointment of additional director,
alternate director & nominee director
• All the 3 sections merged into 1
• Section 161(1) deals with addl dir (AD): BOD can
appoint ADs. Person who fails to get appointed in a
general meeting will not be eligible to be appointed as
AD
• Section 161(2) deals with alternate dir: BOD may
appoint any person to act as alternate director for any
director during his absence for a period not less than 3
months from India (As per old Act absence from the
state is enough)
• This person should not be holding any alternate
directorship for any other director in the company
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Appointment of directors to be voted
individually (Sec 162)
• A single resolution cannot be passed for appointment of more than
1 director
• Unless an approval for en-bloc appointment has been resolved at a
meeting without a single vote cast against it
• In the new law, this section has been made applicable to private
limited companies but as per the draft notification the said sec is
not applicable to private companies
• In 1956 Act, it was applicable to public company and a private
company which is a subsidiary of a public company
• Corresponding to Sec 263 of the old Act.
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Chapter – XII
Meeting of Board & its Powers
• Sections ranging from 173 to 195
• Total 23 sections
• Out of which 9 sections have been made
applicable from 12.09.13
• The notified sections are 176, 180, 181, 182,
183, 185, 192, 194 and 195
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Restrictions on powers of Board
Sec 180
• Certain powers which can be exercised by the BOD
with the approval of general meeting by passing special
resolution, are now applicable to private limited
companies also (As per draft notification this Sec is not
applicable to Pvt cos with less than 50 members)
• Some powers now can be exercised by the BOD after
passing special resolution vis-à-vis ordinary resolution
in the old law
• Contribution to charitable funds as mentioned in old
section 293(1)(e) has been removed and shifted to a
new section
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Company to contribute to bonafide
and charitable funds etc. Sec 181
• The BOD may contribute to bonafide
charitable and other funds
• Provided that, prior permission by way of
resolution at a general meeting is obtained
• This permission only required if the amount,
the aggregate of which, in any financial year,
exceeds 5% of its average net profits for the 3
immediately preceding financial years.
• Net profit not defined.
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Prohibitions & restrictions regarding
political contributions – Sec 182
• Proviso to 293A(2) of the old Act laid the limit
of 5% which has been increased to 7.5% in the
new law
• The way the said contribution needs to be
disclosed in the profit & loss account of the
company has been mentioned too
• Punishment for contravention has been
increased from 3 times to 5 times of the
amount contributed.
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Loan to Directors- Section 185
• 185(1): Provisos - Circumstances and manner in which a company
shall advance any loan to any of its directors
• Or to any other person, in whom the director is interested
• The expression ‘to any other person in whom director is interested’
has been defined
• The section not only mentions loan but also guarantee or any
security in connection with loan.
• Most important change: The new act makes section 185 applicable
to private limited companies also subject to exemption given to
certain class of private Ltd companies having borrowings from
banks, financial institution or any body corporate twice of their paid
up capital or Rs 50 crores which ever is lower and in whose share
capital no other body corporate has invested any money (Draft
notification).
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Restriction on non-cash transactions
involving directors - Sec 192
• This section regulates the arrangements where the:
a. Director of the company or
b. Director of its holding company
c. Director of its subsidiary company
d. Director of its associate company
acquires assets for consideration other than cash, from
the company
Prior approval for such arrangement is accorded by a
resolution of the company in general meeting.
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Prohibition on forward dealings in securities of
company by director or KMP – Sec 194
• It seeks to prohibit whole time director or any
of its KMP
• From buying certain kinds of future contracts
• In relation to the securities of the company
• For contravention – WTD and KMP shall be
liable for imprisonment for a term upto 2
years or fine from one lakh to 5 lakhs and
• They shall surrender such securities to
company itself.
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Prohibition on insider trading of
securities
• It seeks to prohibit directors or any of its KMP
• To deal in securities of a company, or counsel,
procure or communicate
• Directly or indirectly
• About any non-public price sensitive
information to any person
• Imprisonment for a term upto 5 years or
penalty from 5 lakhs to 25 crores
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Compensation for loss of office of managing or
whole-time director or manager-Sec 202
• Manner and circumstances in which any managing director
or whole-time director or manager, shall be entitled to
receive payment by way of compensation:
- for loss of office or
- as consideration for retirement from office or
- in connection with such loss or retirement
• 202(2) lays down the cases when the payment by way of
compensation will not be allowed
• 202(3) specifies the quantification of such compensation
• Corresponding to Sec 318 of the old Act.
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Miscellaneous (Penalties)
• S 447 punishment for fraud – Imprisonment from 6
months to 10 years and fine upto 3 times of the
amount involved.
• Fraud includes any act, omission, concealment of facts
for undue advantage or wrongful gain or loss
• S 448 punishment for false statement.- shall be liable
for penalty as per S 447
• S 449 for false evidence upon any examination or oath
– imprisonment from 3 to 10 years and fine upto Rs 10
lakhs.
• S 452 wrongful withholding of property – fine from Rs
1 -5 lakhs.
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Companies (Accounts)Rules, 2014
• Sec 128 – Books of accounts of the company
shall be kept at its registered office or such
other place as may be decided by the Board.
• The books of accounts shall be kept for a
period not less than 8 years immediately
preceding the financial years.
• Contravention fine from Rs 50,000/- to 5 lakhs
and imprisonment upto 1 year.
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Companies (Accounts)Rules, 2014
• Rule-3
• Books maintained in electronic form shall remain accessible
in India
• Information received from branches should be kept in its
original form .
• The company shall intimate to ROC on an annual basis the
following:
-Name of the service provider
-Internet protocol address of the service provider.
-Location of the service provider
-where the accounts are maintained on cloud, such address as
provided by the service provider
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Accounts Rules cont…
• Rule-4
• Where books are maintained outside India,
summary shall be sent to India on a quarterly
basis, which shall be kept at Registered Office
and open for inspection by directors.
• If any additional details required by the
director, same shall be provided to him within
15 days from the date of receipt of requisition.
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Rule -6
• Consolidation of accounts:
-Consolidation shall be made in accordance with
Schedule III of the Companies Act, 2013 and
applicable accounting Standards.
Sec 129(3) regarding consolidation explains
subsidiary include associate and joint venture
also.
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Rule 8 Board Report
• Shall include
-conservation of energy
-Technology absorption
-Foreign exchange earnings and outgo
-Highlights of financials
-Details of subsidiary, joint venture and associate
companies
-Details of deposits accepted and repaid and
whether there has been any default in
repayment.
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Rule 11
• In the case of listed Companies or public
companies having net worth exceeding 1crore
and turnover more than 10 crores
- financials shall be sent to all the share
holders in electronic form if share holding in
dematerialised form or
-In electronic form if consented in writing to
receive in electronic form otherwise despatch
of physical copies.
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Rule 13 – Internal Audit
• Applicable to listed companies
• Unlisted public companies
-turnover 200 crores or paid up share capital 50 crores or
more or outstanding loans exceeding Rs 100 crore at any
point of time or deposits Rs 25 crore or more during the
preceding financial year.
• Private Limited Companies
• Turnover Rs 200 crores or more or outstanding loans Rs
100 crores or more
Loans from banks or public financial institution only to be
counted.
• S.138. should be Chartered Accountant, Cost accountant, or
such other professional as may be decided by Board.
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Companies (Audit & Auditors) Rules,
2014
• First auditor by the board of directors Sec 139(6) within 15 days
from the date of registration; if not done within 90 days
appointment at an extra ordinary general meeting
• For every subsequent appointment by company at the annual
general meeting the auditor so appointed shall hold office till the
conclusion of every sixth meeting.
• Appointment needs to be ratified at every annual general meeting .
• Company shall avail a certificate from the auditor at the time of
appointment that eligibility criteria as given in Sec 141 is complied
with (Rule 4 ).
• Company shall also file notice in Form ADT-1 within 15 days
confirming the appointment. Earlier auditor to file Form 23B.
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Rule cont…
• Rotation of auditors (S 139(2) & Rule 5) – Class of
companies
-all listed companies
-all unlisted public companies having paid up share
capital of ten crores or more
-all pvt ltd companies having paid up share capital 20
crore or more.
-all companies having borrowings from banks or financial
institution or deposits exceeding Rs 25 Crores.
• Auditors retiring by rotation shall not hold office for a
further period of 5 years.
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Removal of auditors
• Application to central government in Form
ADT-2 within 30 days of the resolution by the
board.
• Pass special resolution within 60 days of the
receipt of the approval from CG.
• When the auditor resigns, he shall file a
statement in Form ADT-3
Varma & Varma
Rules cont…
• In case of criminal liability, such liability shall
be devolved upon only on the concerned
partner.
• Reporting of frauds by auditor to CG in form
ADT-4
Varma & Varma
Companies’ (Acceptance of Deposit)
Rules, 2014
• S 2(31) Deposit includes any receipt of money by way of
deposit or loan or in any other form by the company.
• Under the old Act definition was given in the rules and not
in the Act.
• NBFCs are not covered under the new rule and are
governed by the RBI rules
• As per draft notification, Rule does not apply to private
company having 50 or less members and deposit accepted
from members does not exceed 25% of the paid up capital
& Free Reserve or 100% of Paid up capital whichever is
more and which informs such amount to registrar in the
prescribed form.
Varma & Varma
• As per S. 73 Company cannot accept deposits
from persons other than its members.
• Public company having net worth of not less than
Rs 100 crores or a turnover of not less than Rs 500
Crores may accept deposits from persons other
than its members.
• Deposits accepted by the Company before 1st
April 2014 or any interest thereon shall be repaid
within one year of 1st April, 2014 or due date
whichever is earlier.
• Form DPT -4 to be filed with registrar before 30th
August, 2014 along with the certificate from
statutory auditor of the company.
Varma & Varma
• Every company shall furnish deposit receipt to
the deposit holders within 21 days of the
receipt of money.
• Register of deposit shall be maintained at the
registered office and shall be retained atleast
for a period of 8 years.
• The form of application of deposit shall
contain a declaration by the intending
depositors to the effect that the deposit is not
being made out of any borrowed fund.
Varma & Varma
• Rule 2(1)(C) of the Acceptance of deposit rules, the
deposit does not include:
• Any amount received by a company from any other
company.
• Any amount received as share application money,
if not refunded within 75 days of the receipt of
application money where shares are not allotted
within 60 days of the receipt of money.
• Any amount received for the purpose of the
business, such trade advance exists for more than
365 days.
Varma & Varma
• No company shall accept deposits
-which are repayable on demand
-repayable within a period of less than 6 months
from acceptance
-repayable after six months from acceptance
• Annual return in Form DPT 3 to be filed before
30th June every year.
• Company shall not accept deposits from members
if deposit so accepted exceeds 25% of the sum of
paid up capital and free reserves.
• Rate of interest shall not be more than rate of
interest prescribed by RBI.
Varma & Varma
Chairman’s speech in AGM
Varma & Varma
THANK YOU
Varma & Varma