Deposit includes any receipt of money by way of deposit or loan or in any other form by a company.
As per Rule 2 of the Companies (Acceptance of Deposits) Rules, 2014, deposits do not include:
• Amount received from the Central or State Government or Local Authority or from any other source whose repayment is guaranteed by the Central Government or a State Government.
• Amount received (subject to FEMA) from foreign Governments, foreign or international banks, multilateral financial institutions
• Loan received from any banking company.
• Amount received as loan or financial assistance from Public Financial Institution.
• Any amount received by a company from any other company.
• Any amount received against issue of commercial paper or any other instrument in accordance with guidelines or notification issued by RBI.
• Any amount received as subscription to any securities (including share application money or advance towards allotment of securities, pending allotment) so long as such amount is appropriated ONLY against the amount due on allotment of the securities applied for.
Explanation: If the securities for which application money or advance was received cannot be allotted within 60 days from the date of receipt and the same is not refunded to the subscribers within 15 days from the date of completion of 60 days, such amount shall be treated as a deposit.
• 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.
Provided that if such bonds or debentures are secured by the charge of any assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer.
• Bonds or debentures compulsorily convertible into shares of the company within 10 years.
• Any amount raised by issue of non-convertible and unsecured debentures listed on a stock exchange as per regulations framed by SEBI shall not be considered as deposits.
Example: Soorya Ltd. has raised ₹ 2,00,000 through issue of non-convertible debenture not constituting a charge on the assets of the company and listed on a recognised stock exchange as per applicable regulations made by Securities and Exchange Board of India. The said amount will not be considered as deposit.
• An amount of ₹25 Lakhs 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 ten years from the date of issue) in a single tranche, from a person.
(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.)
• Any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit shall not be considered as deposits.
Example: ₹ 2,50,000 received from Mr. Raghu, an employee of the company who is drawing annual salary of ₹2,00,000 under a contract of employment with the company in the nature of non-interest bearing security deposit. This amount received by company from employee, Mr. Raghu will be considered as deposit as amount received is more than his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit.
• Any amount received from the director of the company and in case of private company also from the relative of the director of the private company subject to a declaration in writing by them that the amount has been given from own’s fund and not from borrowed funds.
The company shall disclose the details of money so accepted in the Board’s report.
• Any unsecured loan brought in by promoters in pursuance of the stipulation of any lending financial institution/bank subject to the fulfillment of following conditions:
(a) the loan is brought because of the stipulation imposed by the lending institutions on the promoters to contribute such finance;
(b) the loan is provided by the promoters themselves or by their relatives or by both; and
(c) such exemption shall be available only till the loans of financial institution or bank are repaid and not thereafter.
• Any non-interest bearing amount received or held in trust.
• Any amount received in the course of, or for the purpose of, the business of the company
(a) as an advance for the supply of goods or provision of services
(provided that such advance is appropriated against supply of goods or provision of services within a period of 365 days from the date of acceptance of such advance)
(b) as an advance received in connection with consideration for an immovable property
(provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement)
(c) as security deposit for the performance of the contract for supply of goods or provision of services;
(d) as advance received under long term projects for supply of capital goods
(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
Note: However, it is clarified that if the amount received under items (a), (b) and (d) above becomes refundable (with or without interest) due to the reasons that the company accepting the money does not have necessary permission or approval, wherever required, to deal in the goods or properties or services for which the money is taken, then the amount received shall be deemed to be a deposit on the expiry of 15 days from the date they become due for refund.
• Any amount received by a company from
(a) Alternate Investment Funds
(b) Domestic Venture Capital Funds
(c) Infrastructure Investment Trusts
(d) Real Estate Investment Trusts
(e) Mutual Funds registered with SEBI
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