In what will be seen as a major relief to Private Limited Companies, the MCA has finally clarified that amounts received by Private Companies ( prior to April 1, 2014 )
a. From Members, Directors or their relatives prior received prior to April 1, 2014 need not be treated as deposits
b. Provided that the same is disclosed in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement
However amounts received after that date or renewed after that date of April 1, 2014 will be treated as deposits
The text of the circular is as under : General Circular No. O5/2O15
1. Stakeholders have sought clarifications as to whether amounts received by private companies from their members, directors or their relatives prior to 1st April, 2014 shall be considered as deposits under the Companies Act, 2013 as such amounts were not treated as 'deposits' under section 58A of the Companies Act, 1956 and rules made thereunder.
2. The matter has been examined in consultation with RBI and it is clarified that such amounts received by private companies prior to 01st April, 2Ol4 shall not be treated as 'deposits' under the Companies Act,2013 and Companies (Acceptance of Deposits) Rules, 2014 subject to the condition that relevant private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement.
3. Any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made thereunder.
4.This issues with the approval of the competent authority.
Tags Corporate Law