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THE COMPANIES (ACCEPTANCE OF DEPOSITS) RULES, 2014 AMENDED BY MCA
The Ministry of Corporate Affairs vide notification dated 29 th of June, 2016 released the
Companies (Acceptance of Deposits) Amendment Rules, 2016. (Deposit Amendment Rules)
We have presented below summary of the changes made to the Companies (Acceptance of
Deposits) Rules, 2014 by the aforesaid Deposit Amendment Rules.
Deposits) Amendment Rules,
Deposits) Rules, 2014
RULE 2 :
Sub-Rule (1),clause (c)
,sub clause (ix)
The term five years has been
changed to ten years.
Sub clause (ixa)
Insertion of new clause
Sub clause (xi)
The term "or" has been omitted
"and" has been introduced
After sub clause (xiv)
Deletion of old
. Longer conversion period of 10
years for Debentures or Bonds
would assist companies in
structuring of debt financing without
being trapped into cumbersome
Deposit norms and is a welcome
Deposit will exclude:
. Any amount raised by issue of
Inclusion of 3 new clauses- (e) , debentures listed on a recognized
stock exchange as per SEBI
Insertion of additional clauses
(xv),(xvi),(xvii), (xviii) clarifying
Any non-interest bearing amount
more items which are excluded
from qualifying as "Deposit"
received and held in trust in course
of or for purpose of business of the
. Any amount received as advance
in the providing future services of the
nature warranty or maintenance
. Any amount received and allowed
by any sectoral regulator or in
accordance with directions of
Central or State Government
. Any amount for subscription
towards publication in print or
electronic media to be adjusted
against receipt of such publications.
.Deposit would also exclude
subscription amount received in
respect of chit under the Chit Fund
Act, 1982, or under collective
investment scheme under the SEBI
. An amount of Rs 25 lakhs or more
received by a startup company by
way of convertible note.
. Further, Deposit would exclude
any amount received by a company
from Alternative Investment Fund,
Domestic Venture Capital Fund or
Mutual Funds registered with the
SEBI in accordance to its norms.
RULE 3 :
In sub-rule (3)
Sub rule (8)
The words twenty -five percent,
the words thirty - five percent
All Companies [refer to section
shall be substituted.
73(2)] allowed to accept or renew
Now Sub-rule (8) becomes sub- deposits from its members, not
rule 8(a) and addition of sub - exceeding 35% of the aggregate of
the paid-up share capital, free
reserves and securities premium
account. Earlier this limit was 25%.
. Private company are now allowed
to accept from its members monies
not exceeding 100% of aggregate of
the paid up share capital, free
reserves and securities premium
. Credit rating for deposits shall not
be below the minimum investment
grade rating or any other specified
credit rating ) for fixed deposits from
approved credit rating agencies as
specified for NBFCs under the RBI
Rule 4 :
Rule 5 :
Rule 16 :
Insertion of Rule 16A
Addition of words "and shall
also place such circular on the
website of the company, if any."
31 st March 2016 replaced with
31 st March 2017
Disclosures in the financial
. Publication of circular on the
website of the company (if any) is
now mandatory in addition to
. Increases the timeline for deposit
insurance by 1 year, given the
shortage of such products with
. Talks about essentials disclosures
in the financial statement:
. Every company (other than private
company) has to disclose in its
financial statement by way of notes
about money received from directors.
. Every Private company has to
disclose in its financial statement by
way of notes about money received
from directors and relatives.
Insertion of Para-7: Disclaimer
. Filing of circular or circular in form
of advertisement may not be
understood as having been cleared
or approved by the Central
. Exercising of due diligence by
The disclaimer aims to caution the
Investor of the risk associated with
investing in Deposits.
RULE 2 :
a. Sub-Rule (1), clause (c) sub clause (ix) now reads as any amount raised by the issue of bonds
or debentures secured by a first charge or a charge ranking pari passu with the first charge on
any assets referred to in Schedule III of the Act excluding intangible assets of the company or
bonds or debentures compulsorily convertible into shares of the company within 10 years.
b. Sub-Rule (1),clause (c) sub clause (ixa) has been added -" any amount raised by issue of
nonconvertible debenture not constituting a charge on the assets of the company and listed on a
recognized stock exchange as per applicable regulations made by Securities and Exchange
Board of India"
c. Sub-Rule (1), clause(c) sub clause (xi) has a clarifying stance-“any non-interest bearing
amount received and held in trust". The word 'and' replaces the word 'or
d. In sub clause (xii) after item (d) and before proviso these items have been inserted:
(e) as an advance towards consideration for providing future services in the form of a warranty or
maintenance contract as per written agreement or arrangement, if the period for providing such
services does not exceed the period prevalent as per common business practice or five years,
from the date of acceptance of such service whichever is less;
(f) As an advance received and as allowed by any sectoral regulator or in accordance with
directions of Central or State Government;
(g) As an advance for subscription towards publication, whether in print or in electronic to be
adjusted against receipt of such publications;"
e. After sub clause (xiv) 3 new sub clauses have been added:
(xv) Any amount received by way of subscription in respect of a chit under the Chit Fund Act,
1982 (40 of 1982)
(xvi) Any amount received by the company under any collective investment scheme in
compliance with regulations framed by the Securities and Exchange Board of India
(xvii) an amount of twenty five lakh rupees or more received by a start-up company, by way of a
convertible note (convertible into equity shares or repayable within a period not exceeding five
years from the date of issue) in a single tranche, from a person.
There is a new Explanation which replaces the old one:
1. "start-up company" means a private company incorporated under the Companies Act, 2013 or
Companies Act, 1956 and recognized as such in accordance with notification number C.S.R.
180(E) dated 17t'h February, 2016 issued by the Department of Industrial Policy and Promotion,
Ministry of Commerce and industry.
2. "Convertible note" means an instrument evidencing receipt of money initially as a debt, which
is repayable at the option of the holder, or which is convertible into such number of equity shares
of the start-up company upon occurrence of specified events and as per the other terms and
conditions agreed to and indicated in the instrument.
(xviii) Any amount received by a company from Alternate Investment Funds, Domestic Venture
Capital Funds and Mutual Funds registered with the Securities and Exchange Board of India in
accordance with regulations made by it."
a. Sub-rule (3) (a) now reads as "No company referred to in sub-section (2) of section 73 shall
accept or renew any deposit from its members, if the amount of such deposits together with the
amount of other deposits outstanding as on the date of acceptance or renewal of such deposits
exceeds thirty five per cent. of the aggregate of the paid-up share capital and free reserves of
b. Inserting Sub-rule 3(b), "Provided that a private company may accept from its members
monies not exceeding one hundred per cent of aggregate of the paid up share capital, free
reserves and securities premium account and such company shall file the details of monies so
accepted to the Registrar in such manner as may be specified."
c. For sub-rule (8), the following sub-rule shall be substituted, namely:
"(8).- (a) Every eligible company shall obtain at least once in a year, credit rating for deposits
accepted by it and a copy of the rating shall be sent to the Registrar of Companies along with the
return of deposits in Form DpT-3
(b) The credit rating referred to in clause (a) shall not be below the minimum investment grade
rating or other specified credit rating for fixed deposits, from any one of the approved credit rating
agencies as specified for Non-Banking Financial Companies in the Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998, issued by the
Reserve Bank of India, as amended from time to time."
RULE 4 :
a. Sub-rule(2) , the following sub-rule shall be substituted, namely:- " Every eligible company
intending to invite deposits shall issue a circular in the form of an advertisement in form DPT-1
for the purpose in English language in an English newspaper having country wide circulation and
in vernacular language in a vernacular newspaper having wide circulation in the State in which
the registered office of the company is situated, and shall also place such circular on the website
of the company, if any."
RULE 5 :
a. for the proviso, the following proviso shall be substituted, namely:- "Provided, that the
companies may contract till the 31s March, 2017 or product, whichever is earlier accept deposits
without deposit insurance till the availability of a deposit insurance”
RULE 16 :
Insertion of RULE 16A:
"16A. Disclosures in the financial statement. - (1) every company, other than a private company,
shall disclose in its financial statement, by way of notes, about the money received from the
director. (2) Every private company shall disclose in its financial statement, by way of notes,
about the money received from the directors, or relatives of directors."
FORM DPT-1 :
In form DPT-1(Annexures), the following para shall be inserted, namely:"6. DISCLAIMER. - It is to be distinctly understood that filing of circular or circular in the Form of
advertisement with the Registrar should not in any way be deemed or construed that the same
has been cleared or approved by the Registrar or Central Government. The Registrar or Central
Government does not take any responsibility either for the financial soundness of any deposit
scheme for which the deposit is being accepted or invited or for the correctness of the statements
made or opinions expressed in the circular or circular in the Form of advertisement. The
depositors should exercise due diligence before investing in the deposits schemes."
To Download the copy of the Companies (Acceptance of Deposits) Amendment Rules,
2016 click on the below link under the Rules section on www.nclt.in
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