Acceptance of deposit rules 2014

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2014 sir,
can you please let me know whether acceptance of loans from directors, shareholders and members are considered as deposits and also whether the auditors should give an audit report regarding these deposits in the form DTP 4 under acceptance of deposit rules 2014

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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25 November 2014 The Companies Act,1956 permitted private companies to borrow from directors, shareholders and relatives of directors. However the Companies Act 2013 has brought a major change in the borrowing provisions for private companies and removed shareholders and relatives of directors from the list of lenders.

Going forward the private companies can borrow only from directors apart from banks and financial institutions provided the director gives a declaration that the amount that he is giving is not out of borrowed funds.

If any company is desirous of obtaining loan from any other person then they have to comply with the Deposit rules which include obtaining credit rating, issuing circular, creating deposit repayment reserve account, etc.

As per Section 74(1) of Companies Act, 2013 every Company is required to file Return of Deposits in Form DPT -4 along with Auditor’s Certificate