The Ministry of Corporate Affairs (hereinafter referred to as “MCA”) vide its Notification G.S.R 454(E) dated11 May, 2017 has amended Companies (Acceptance of Deposits) Rules, 2014 vide the Companies (Acceptance of Deposits) Amendment Rules, 2017.
Through this amendment MCA has brought following changes:
- In rule 2(1), in clause (c), after the words “Domestic Venture Capital Funds” the words “Infrastructure Investment Trusts” shall be inserted.
Infrastructure Investment Trusts (InvITs) are similar to mutual fund companies that allow pooling of the infrastructure projects into a separate trust and allow investors to invest in units of InvITs.
Rule2 (1) clause c provides the definition of Deposits, according to which deposits include any receipt of money by way of deposit or loan or in any other form by a company, but does not includes-
Sum received from the Central Government/ the State Government/ Local Authority/ Statutory Authority/ Foreign Government/ International Banks/ Foreign Bodies Corporate/ Foreign Citizens/ Loans from Banks or Public Financial Institution/ Amount raised against issue of Commercial Paper/ Amount raised fom other company/ Amount received from Director of the company or Relative of director of the Private Company/ Amount received from an Employee of the company/ Amount for share subscription, pending allotment/ Amount received and held in trust/ amount received in course of business/ Amount brought by promoters in form of unsecured loans in pursuance of condition of financial institution/ Amount accepted by Nidhi Companies/ Amount received by Chit Fund Company by subscription of Chit/ Amount received by the company under Collective Investment Scheme/ Amount received by Startup Companies upto INR 25 lakhs by issue of convertible notes/ Any amount received by a company from Alternate Investment Funds, Domestic Venture Capital Funds, Infrastructure Investments Trusts and Mutual Funds registered with the Securities and Exchange Board of India.
- In rule 5(1), the following proviso shall be substituted, namely: — “Provided that the companies may accept deposits without deposit insurance contract till March 31, 2018 or till the availability of deposit insurance product, whichever is earlier”.
Section 73(2) of the Companies Act 2013, read with Rule 5 of the Companies (Acceptance of Deposit) Rules, 2014 requires every company inviting deposits to enter into a contract for providing deposit insurance at least 30 days before issue of circular or advertisement. Prior to this amendment, company were allowed to accept deposit without deposit insurance contract till March 31, 2017. However, because of nonavailability of such deposit insurance products, companies have been allowed to raise deposits without any such deposit insurance till March 31, 2018 or till such deposit insurance product is available, whichever is earlier.