In this Article we are discussed about Compliance and provision to be followed with respect to the loan from shareholders by Private Limited Company:

A. Applicability of Section of Companies Act, 2013

  • Section 73: Prohibition on Acceptance of Deposit and relevant rules
  • Section 179: Power of Board of Directors and relevant rules

B. Form to be file with the ROC

  • MGT-14: Within 30 days of passing of the resolution, if required
  • DPT-3: On or before 30th June, of every year.

C. Provision of Companies Act, 2013

As per section 73(2), a Company may accept deposits from member’s subject to the passing of Ordinary Resolution in General Meeting;

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Subject to compliance with rule 3 & Terms and Conditions of Acceptance of Deposits by Companies    

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Subject to fulfillment of the Conditions mentioned under Chapter V, clause (a) to (e) of sub-section (2) of section 73

D. MCA Notification:

MCA Notification dated 13th June 2017, refers that: Chapter V, Clause (a) to (e) of Sub-section (2) of Section 73 shall not be applicable to Private Limited Companies, which fulfills any of the following conditions:

  1. which accepts any amount, as a deposit from its members, not exceeding 100% of (Paid-up Share Capital + Free Reserves + Security Premium Account); OR
  2. The company, which is a start-up, for minimum five years from the date of its incorporation; OR
  3. Which fulfills all of the following conditions, namely: –
  • Which is not an associate Company or a subsidiary Company of any other Company; AND
  • If the borrowings of such a company from banks or financial institutions or any body corporate is less than the twice of its {paid up share capital or fifty crore rupees}; whichever is lower; AND
  • such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under this section-73.

PROVIDED THAT, the Companies refereed above in clause 1, 2and 3 shall file the details of such amount, received as a deposit to the Registrar in a specific manner.

E. Procedure for Acceptance of Deposit from Members/ Shareholder’s subject to exemption of Compliance mentioned in 73(2) clause (a) to (e).

If Private Company wants to accept any amount from its members in the form of deposit, then such Company have to follow the following steps:-

Step -1 Check whether such Company falls under any of the aforesaid mentioned Conditions;

Step:2 Check whether, such amount of loan in the form of deposit from a shareholder, shall nowhere to fall under the definition of DEPOSIT.

Step:3 Calculate the amount of deposit, such a Company can accept from its shareholders.

Step:4 –Hold a Meeting of Board of Director u/s 179(3); -To Pass Board Resolution for Authorization of Borrowing; -To issue a notice for calling of General Meeting u/s 73(2).

Step:5 –Hold a General Meeting of Shareholders u/s 73(2) -To pass an ordinary resolution to accept a loan from the shareholder.

Step:6 Such Company shall file e-form DPT-3 for such deposit at the time of acceptance of deposit from a shareholder, and Company has to show such Loan in the Category of deposit; {Company has to attach a certificate of Statutory Auditor for the same};

Step:7 Company have to select remote button no. 2 or 4;

Step:8 Company shall also file e-form DPT-3 every year for such deposit on or before 30th June.

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