Introduction:
The purpose of the article is not on an examination of DPT-3 as to its format and its contents. In the earlier dispensation under the Companies Act, 1956, only companies inviting public deposits are to file annual certificate duly certified by the auditors. Now, notwithstanding not inviting deposits, companies have to file a certificate in DPT-3. The purpose for which it is done not made clear. But, besides, it has been demanded in a haphazard manner without proper guidance in coerce time making the companies loitering even at the eleventh hour. Even today on the cusp of the filing date, clarifications given are of the cup. The MCA should either extend time or condone unintended slips for want of proper guidance on tricky issues dealt with below.
Filing of Return of Deposits/Form DPT –3 to comply with the provisions of Chapter V of the Companies Act, 2013 on ‘Acceptance of Deposits by Companies’ to be read with rule 16 and rule 16A of the Companies (Acceptance of Deposits) Rules, 2014 has created a hell of confusion. A lot of co-operation is highly warranted between ICAI and MCA besides the good office of ICSI to sort-out the confusion caused by a slip-up in the filing of Form No DPT-3 within the stipulated time that is 30th JUNE.
No doubt, the concerned Institutes are taking up with the concerned authorities in the MCA to issue necessary clarifications to facilitate the smooth filing of Return of Deposits.-
The issues involved are many folds and the accounting and auditing communities are a loss to go forward since the clarifications issued are not total to all the issues confronted.
As per (Acceptance of Deposits) Rules, 2014, every company to which these rules apply is required to file with the Registrar:
(i) In terms of Rule 16: a return in Form DPT-3 on or before the 30th day of June, of every year and furnish the information contained therein as on the 31st day of March of that year duly audited by the auditor of the company;
(ii) Again as per Rule 16A: a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in terms of clause (c) of sub-rule (1) of rule 2 from 1st April, 2014 to 31″ March 2019, as specified in Form DPT-3 within ninety days from 31′ March, 2019.
The following issues are highlighted by ICSI and other auditing communities by representing to the concerned authorities OF MCA.
Issues involved in case of one-time DPT-3 Returns:
a. Whether the amount received before 1st April 2014 is to be included if that remains outstanding as on 31st March 2019?
b. Whether the amount of interest is to be added in the outstanding amount?
Clarity required in reading the substance and content of DPT-3:
a. In reporting the outstanding amount as on 31′ March 2019 in the annual DPT-3 form in case of “Particulars of transactions by a company not considered as deposit under rule 2(1) (c) of the said Companies (Acceptance of Deposit) Rules, whether the amounts received from a company in March 2018/or earlier and outstanding as on 31st March 2019 and it is not a deposit as per rule 2(1)(c), then in such a case whether the transactions that have occurred before 1st April 2018 to be also reported in Annual DPT3 form, if amount is outstanding as on 31st March 2019?
b. Whether `Nil Return’ is obligatory for annual filing?
c. According to Rule 16, companies are required to file Return of Deposits or Annual Return of exempted deposits by 30th June every year on the basis of the audited financial statement up to 31″ March.
In this regard, it is better to refer and focus on the related provisions of the Companies Act, according to which the annual general meeting is to adopt the financial statements within a period of six months from the date of closing of the financial year. In light of the above, it deserves merited attention as to the feasibility of complying with the requirement of the Audit of financials for the purpose of filing of Form DPT-3. It will be highly appreciated that the issue is really addressed with all the attention it deserves.
Clarification on Auditor’s Certificate on Return of Deposits pursuant to Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014
This has reference to Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014 and further amendments.
In this regard, the Ministry of Corporate Affairs vide its letter no. File No: P-01/08/2013- CL-V Vol. VI dated June 24, 2019, has clarified on the matter as under:
- The auditor’s certificate is mandatory only in the case of return of deposits.
- For filing particulars of transactions not considered as deposits information contained therein as on 31st March of that year need not be from the duly audited statement.
- Only in case of return of Deposit information contained therein as on 31st March of that year should be from the duly audited financial statement of the company.
Also in order to provide guidance to members, the Auditing and Assurance Standards Board of ICAI has issued illustrative Auditors Certificate on Return of deposits, which may be referred to.
What about Insurance Companies?
The next issue is as to whether insurance companies are coming under the notch of the acceptance of deposits under section 73 of the Companies Act, 2013 to be read with the rules as amended as on date.
According to the section to be read with the relevant rules it shall apply to a company other than;
i) Banking Company
ii) NBFC as defined in the RBI Act,1934 registered with the RBI
iii) Housing finance company registered with the National Housing Bank established under the National Housing Bank Act,1987
iv) Company specified by the Central government.
In terms of the powers given to the RBI, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stockbroking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982,Housing Finance Companies regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company. In that case, insurance companies are not coming under exemption ii) above. As a result, insurance companies may have to file DPT-3 since not NBFC as defined in the RBI Act1931. This is also to have been clarified.
Conclusion:
The above said clarification from MCA is too late and in my opinion, too little, in the light of the fact the due date is already in the cusp/ horizon.
Regarding the clarification sought on “Particulars of transactions by a company not considered as deposit under rule 2(1) (c) of the Companies (Acceptance of Deposit) Rules, on the amounts received from a company in March 2018/or earlier and outstanding as on 31st March 2019 and it is not a deposit as per rule 2(1)(c), then in such case whether the transactions that have occurred before 1st April 2018 is also to be reported in Annual DPT3 form, if amount is outstanding as on 31st March 2019 is not answered in nut and bolts. But, since the certificate is for particulars of receipt of money or loan by a company but not considered as deposits at the end of the financial year, in terms of clause (c) of sub-rule 1 of rule 2 of the Companies (Acceptance of Deposits) Rules, 2014. Since it only speaks of receipt of money or loan and outstanding at the end of the financial year, it may be construed that the essence is on outstanding as on---- but the amount might have been received in earlier years also. Anyhow, this could have been made clear especially when clarification is demanded on that..
If we visit llustrative1 Auditor’s Certificate on Return of Deposits as at [state the year end] pursuant to Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014, as amended, ---it is for reporting
'The Form DPT-3 for Return of Deposits as at [state the year end] (the "Return") of [name of Company, CIN…………………………….. ] (the "Company"), containing the details of deposits accepted by the Company OR details of deposits accepted by the Company and particulars of transactions by the Company not considered as deposit as per Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, has been prepared by the management of the Company in accordance with Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014 (the "Rules") as amended from time to time.
A plain reading of the above makes it clear this report is intended for containing the details of deposits accepted by the Company OR details of deposits accepted by the Company and particulars of transactions by the Company not considered as deposit as per Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014. What about if the company has not accepted deposits under Section 73 of the Act but has only exempted deposits- this illustrative report ostensibly does not cover- why because it is a statement of fact as per audited accounts. It is neither a temporary assurance nor arson able assurance whence only, more often than not, opinion is formed.
The MCA clarification is also conspicuously silent on other doubts focused to them as to other issues particularly on item ‘b’ mentioned above as to Whether `Nil Return’ is obligatory for annual filing?
By proper and necessary FAQs, these points may be addressed to eschew ambiguity.
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