Can Private Limited Companies accept deposits?
Yes, they can. Here are the provisions.
I
A Private limited company after passing of a resolution in general meeting can accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members without issuing circular to members, without requiring to file circular with Registrar of companies office, without keeping liquid assets in bank. Only condition is that such a private company should not have been defaulted in the repayment of deposit/s or interest thereon. (Clause (a) to (e) of Sub-section 2 of section 73).
The limits for acceptance of deposits from its members is – one hundred per cent, of aggregate of the paid-up share capital and free reserves, which includes security premium reserves also.
Such company shall file the details of monies so accepted to the Registrar in DPT-3.
II
Maximum limit of deposits that can be accepted from members (100% of aggregate of the paid-up share capital and free reserves) is not applicable to the following companies –
- A private company which is a start-up (registration obtained from Government). This exemption is applicable for 10 years from date of its incorporation.
- A private Company which fulfils following criteria:
- Which is not an associate or a subsidiary company of any other company
- Borrowings of such private company from banks / FIs / body corporate is less than twice of its paid-up share capital or Rs. 50 Crores, whichever is less.
- Such company has not defaulted in the repayment of such borrowings subsisting at the time of acceptance of deposit under section 73.
Such company shall file the details of monies so accepted to the Registrar in DPT-3.
III
Any amount which is ‘not deposit’ as per Rule 2 ( c ) of The Companies (Acceptance of Deposit) Rules, 2014 e.g., Inter Corporate Deposits, unsecure loan from Directors and their relatives.
Other compliances for acceptance of deposits
- Annual Compliance: the companies accepting deposits shall file the details of monies so accepted to the Registrar in Form DPT-3 , on or before the 30th day of June, of every year, furnishing the information contained therein as on the 31st day of March of that year.
- Interest: Deposit accepted by a company shall be repaid with interest (Interest rate cannot exceed the maximum rate of Interest prescribed by RBI for Acceptance of Deposits by NBFCs).
- Duration of Deposits: tenure of Deposits shall not be less than 6 months & not more than 36 months from the date of acceptance.
If you need any further assistance with the acceptance of deposits by private limited companies, get in touch with us.