Govt provides clarity on deposit-taking norms for private cos

Amounts received by private firms from its members, directors or their relatives prior to April 1, 2014, would not considered as deposits under the new companies law, the government said today.
However, companies are required to provide details about such money received in their financial statement for the year starting from April 1, 2014 -- the date when most provisions of the Companies Act, 2013, came into force.
The Corporate Affairs Ministry, which is implementing the Act, has provided the clarification after having discussions with the Reserve Bank of India (RBI).
"... Such amounts received by private companies prior to April 1, 20l4, shall not be treated as 'deposits' under the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014," the Ministry said in a circular.

In such cases, relevant companies are required to disclose, "in the notes to its financial statement for the financial year commencing on or after April 1, 2014, the figure of such have been shown in the financial statement".
Under the Companies Act, 1956, such amounts were not treated as deposits.
"Any renewal or acceptance of fresh deposits on or after April 1, 2014, shall, however, be in accordance with the provisions of Companies Act, 2013, and rules made thereunder," the circular said.
The new companies law has stringent provisions in place to prevent instances of illegal money pooling and illicit funding activities.