Deposits to a private ltd company
This query is : Resolved
02 August 2013
GREETINGS,
ONE OF OUR CLIENTS IS A MANUFACTURING CONCERN AND THEY WANT TO COLLECT MONEY FROM THEIR DISTRIBUTORS PURPOSE BEING SECURITY DEPOSIT AND THEY ARE WILLING TO PAY INTEREST ON IT, BUT MY DOUBT IS THAT SINCE THEY ARE A PRIVATE LIMITED COMPANY THEIR IDEA IS AGAINST THE PROVISIONS OF COMPANIES ACT, PLEASE SUGGEST.
ONE OF OUR CLIENTS IS A MANUFACTURING CONCERN AND THEY WANT TO COLLECT MONEY FROM THEIR DISTRIBUTORS PURPOSE BEING SECURITY DEPOSIT AND THEY ARE WILLING TO PAY INTEREST ON IT, BUT MY DOUBT IS THAT SINCE THEY ARE A PRIVATE LIMITED COMPANY THEIR IDEA IS AGAINST THE PROVISIONS OF COMPANIES ACT, PLEASE SUGGEST.
02 August 2013
Hi
Deposits in case of Private Limited Company
Private Company is prohibited to accept any invitation or acceptance of unsecured loans/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) exempt any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b)(ix), any amount received from members of a private company limited by guarantee are not exempt.
Rule 3 of Companies (Acceptance of Deposits) Rules, 1975 deal with the limit upto which a company can accept deposits/ loans. Private company exempted this limit.
For any invitation and acceptance of unsecured loan/deposits from relatives of directors and member, the company will have to file a statement in lieu of advertisement in accordance with the provisions of Rule 4A of the Companies (Acceptance of Deposits) Rules, 1975. The company will also have to file annual return of deposits in accordance with Rule 10.
Deposits in case of Private Limited Company
Private Company is prohibited to accept any invitation or acceptance of unsecured loans/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) exempt any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b)(ix), any amount received from members of a private company limited by guarantee are not exempt.
Rule 3 of Companies (Acceptance of Deposits) Rules, 1975 deal with the limit upto which a company can accept deposits/ loans. Private company exempted this limit.
For any invitation and acceptance of unsecured loan/deposits from relatives of directors and member, the company will have to file a statement in lieu of advertisement in accordance with the provisions of Rule 4A of the Companies (Acceptance of Deposits) Rules, 1975. The company will also have to file annual return of deposits in accordance with Rule 10.
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02 August 2013
Consequences of acceptance of deposit by Private Limited Company
If a private company acceptance 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, 26
Consequences of acceptance of deposit by Private Limited Company
If a private company acceptance 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, 26
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02 August 2013
sir, thank you for for your valuable reply ,does this deposit(as i call) qualify as a deposit as per companies act and if then the only provision which i am aware of is conversion of company into public limited company is there anything else the company company has to do.
02 August 2013
Yes, it will cover under Depots and you will comply the provision of section 58A.
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