Acceptance of deposits by pvt ltd co. from its shareholders.
This query is : Resolved
12 June 2013
Sir,
can a pvt co. accept deposit from its share holders?
If can, der is any limit to such acceptance?
Please help me.
can a pvt co. accept deposit from its share holders?
If can, der is any limit to such acceptance?
Please help me.
12 June 2013
As per Section 3(1) (iii) (d) a Private Company is prohibited to accept any invitation or acceptance of deposits from the persons other than its members, directors or their relatives. Therefore a private company can accept deposits through private arrangement from its members, directors and their relatives.
Rule 2(b) (ix) of Companies (Acceptance of Deposits) Rules, 1975exempts any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b) (ix), deposit under Companies (Acceptance of Deposits) Rules, 1975 does not include any amount received by a private company from a person who, at the time of the receipt of the amount, was a director, relative of director or member:
Provided that the director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others;
If a private company accepts an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc.
In my opinion a simple way to arrange funds from outsider for a Private Company is to issue share to such outsider and make that outsider a member of Company and then get fund from them.
Rule 2(b) (ix) of Companies (Acceptance of Deposits) Rules, 1975exempts any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b) (ix), deposit under Companies (Acceptance of Deposits) Rules, 1975 does not include any amount received by a private company from a person who, at the time of the receipt of the amount, was a director, relative of director or member:
Provided that the director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others;
If a private company accepts an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc.
In my opinion a simple way to arrange funds from outsider for a Private Company is to issue share to such outsider and make that outsider a member of Company and then get fund from them.
12 June 2013
Yes, a private company may accept deposit from its shareholders, directors and relatives thereof only.
Further, it would be classified as exempted deposit as unsecured loans.
Deposit rules does not apply on Private Company.
Further, it would be classified as exempted deposit as unsecured loans.
Deposit rules does not apply on Private Company.
14 June 2013
Sir,
what is rate of interest applicable. Is there any limitation?
please reply sir
what is rate of interest applicable. Is there any limitation?
please reply sir
15 June 2013
In case the deposit rules apply the limits shall be 10% from shareholders and the maximum rate of interest is 12.5%.
As such the Deposit rules are not applicable the above limits shall also not apply.
As such the Deposit rules are not applicable the above limits shall also not apply.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Scrutiny and reopening of past returns
- Tax on Deemed Capital Gain
- Regarding ITR filing with more value than showing in AIS/TIS
- Type of Capital Gain
- Exiting partner in partnership firm in gst portal
- Booth for sales promotion
- F & O PROFIT REPORTING FOR AY 2026-27
- Rental income of jointly held property
- ITR-3 File/Error Found
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Taxation in the hands of Landowner under JDA
- Delisted shares sold in off market/ Rebate u/s87A
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
