Cos get more time to comply with deposit insurance norms

Making relaxation in implementation of new companies law, the government has given time till March next year for entities to comply with the requirement of insuring deposits taken from the public.
The move from the Corporate Affairs Ministry, which is implementing the Companies Act, 2013, comes in the wake of suggestions from stakeholders who had sought transitional time for complying with the new norm.
Already, the Ministry has effected certain changes besides providing clarity on various aspects of the new law -- whose many sections came into force from April 1.
"In view of the suggestions received from the stakeholders to give transitional period for complying with the deposit insurance requirements, the amendment in the relevant rule has been made allowing companies to accept deposits without deposit insurance for one year ie till Marhc 31, 2015," the Ministry said in a statement today.

Under the new legislation, companies taking deposits are required to insure them. The norm is expected to help in curbing fraudulent investment schemes that dupe investors.
Besides, the Ministry has provided clarification with respect to companies facing difficulties in repayment of deposits.

"With a view to allow relief to companies facing difficulties in repayment of deposits, provisions of section 74(2) & (3) of the Act have been brought into force with effect from June 6, 2014," the statement said.
Section 74(2) and (3) pertain to repayment of deposits that were accepted before commencement of the new Act.
Further, the Company Law Board (CLB) has been allowed to exercise the powers to allow further time to companies for repayment of deposits/interest in certain cases, the Ministry said.

Among others, the Ministry had eased norms by saying that an independent director's previous tenure would not be counted towards the ten-year period limit, as mandated under the new companies law, provided that the individual is appointed afresh before March 2015.
Under the new Act, an independent director can have a maximum of two tenures of five consecutive years (a total of ten years), with a cooling off period of three years.