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Public deposit

CS Sourabh Sharma (Company Secretary MBA (Finance) LL.B) (31 Points)

23 April 2014

Dear All,

A Pvt. Ltd. Company had accepted share application money and unsecured loans from its members in 2013 and before it. Now thesse transections has come in the ambit of Public Deposit in the Companies Act, 2013. Section 74 of CA, 2013 states that all deposits priviously accepted by the Companies will have to follow certain comnpliances.

My query is that how these two transections would be treated in view of these new rules? Will these be treated as Public Deposit or not? Because before 1st April, 2014 these were not public deposits and allowed under CA, 1956.

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3 Replies

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 23 April 2014

Sec.74 will apply in such a case and the amount needs to be refunded. Sec.74 does not say 'deposit as defined in earlier company law'. Hence for the meaning of 'deposit' we will have to refer only CA 2013 and Rules framed thereunder, according to which loan from shareholders is a deposit.

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CS Sourabh Sharma (Company Secretary MBA (Finance) LL.B) (31 Points)
Replied 23 April 2014

Thanks Mr. P C Agrawal Sir, now its clear in case of loans from shareholders. But what about in case of share application money. New Act gives us 60+15 days time limit to repay the such money. Do we have such time limit in this case?

Views of all experts are solicited.

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 23 April 2014

Yes Sourabh,

Since the provisions relating to share application have been made effective from 01/04/2014, so in my view, all share application money pending as on 31.03.14, have to be allotted or refunded within the time limit specified.

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