Personal Finance Blog India –

New Companies Act -2013 and Company Deposits – Updated Rules and Regulations:

Ministry Of Corporate Affairs have notified new Companies Act which has come up with updated rules about Deposits being accepted by company acts.Non-Banking finance companies accepts deposits under different rules (RBI Act 1934) and this new act will not applicable to NBFCs.

Currently deposits are being accepted under Companies Act 1956 (Acceptance of Deposits ) rules 1975. (Sections 58A,58AA and 58AAA) and now deposits can be accepted through new companies act 2013.

This new act is expected to come in existence from April 01, 2014 .

Following are few important points about New Company Act:

  1. Eligibility for accepting deposits : Earlier company with net owned fund of min Rs.1 crore was able to accept deposits.As per new company law 2013,a company with minimum net worth of 100 Crore or minimum turnover of Rs.500 crore shall be able to accept the many small size companies will out of race.
  2. Credit Rating : It will compulsory for Companies to obtain Credit Rating from recognized credit rating agency.Currently Credit rating is compulsory for NBFCs but not for company deposits.
  3. Security : As per earlier rules,company deposits were of unsecured nature.But now company deposits may be either unsecured or secured.Company need to mention it specifically whether deposits are Secured or UnSecured.In case of secured deposits,Deposits up to Rs.20,000 need to be secured through deposit insurance and further deposit amount need to be secured   via creating charge of physical assets  in favor of depositors through appointment of Deposit Trustees.
  4. Shareholder resolution :If company is looking to accept deposits only from members then ordinary resolution is necessary.If company is looking accept deposits from public then special resolution from shareholders needed.
  5. Deposit Receipt issuing time line : Earlier this time line was 08 weeks now deposit receipt need to issued with in 02 weeks from date of cheque realization.
  6. Deposit Repayment Reserve : Companies will need to create deposit repayment reserve and amount in deposit reserve shall not fall below 15% of  deposits maturing in the financial year at any time.This reserve need to be created up to april 30 of every year and this fund can not be used for any other purpose except repayment of deposits.

Recently few companies were started avoiding repayment of public deposits and Overall,new act will safeguard the interests of depositors.

Category: Fixed Income


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