Amendments in Companies Act and Rules

Frequent amendments in the Act and Rules. Though it gives link to MCA website, searching the amendments chapterwise becomes easy.

https://www.icsi.edu/WebModules/CompaniesAct2013/Annexure.htm

Updates:

1. Extension of last date of filing of Income tax  returns for the FY 2015-2016 (AY 2016-17) from 31.07.2016 to 05.08.2016. For J&K assessees last date is 31.08.2016.
2. 15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.
3. Person attaining age of 60 or 80 years on 1st April shall be considered Senior/Very senior citizen for immediately preceding  financial year. CBDT Circular 28 of 27-7-16.
4. MCA issues The Companies (Accounts) Amendment Rules, 2016. MCA Notification dated 27.07.2016.
5. MCA releases Companies (Incorporation) Third Amendment Rules, 2016. MCA Notification dated 27.07.2016.

Updates:

1. Due date of filing DVAT return in form DVAT-16, DVAT-17 & DVAT-48 for Q1 of 2016-17 extended to 31.08.2016. Circular no. 11 of 2016-17 dated 28.07.16.
2. MCA issues Limited Liability Partnership (Amendment) Rules, 2016. Form 14 (intimating Registrar of Firms, for conversion of firm into LLP) revised. Notification of 13.4.16.
3. Where bar to suit by a company arises under an article of the articles of association of the company, there can be no ratification by the official liquidator. [Subiksha Trading service limited vs. Azim Premji [2016] 133 CLA 31. HC of Mumbai].
4. Surplus investment in mutual funds cannot render principle of Mutuality inapplicable. [CIT-3 Vs. M/s. Air Cargo Agents Association of India (Bombay high Court)].

INSTITUTE FOR CORPORATE ACHIEVERS: Schedule for various Cut-Off Dates for the year 20...

INSTITUTE FOR CORPORATE ACHIEVERS: Schedule for various Cut-Off Dates for the year 20...: Note: Please note that Admission / Registration Applications, Examination Enrollment applications, Applications for claiming paper-wise ...

Schedule for various Cut-Off Dates for the year 2016 pertaining to the Students

Note: Please note that Admission / Registration Applications, Examination Enrollment applications, Applications for claiming paper-wise Exemptions, Applications for Registration in De-novo / Extension etc. shall be accepted through online mode only. Therefore, it is clarified that on the scheduled cut-off date even if there is Holiday/Off-day, there shall be no change in the prescribed cut-off date, as online services can be availed 24x7 any time from any where at Institute’s website www.icsi.edu

Particulars of Cut-off Dates	Scheduled Cut-off Date
Declaration of Results of December 2015 Examination.	25.02.2016
Acceptance of Applications for Admission to    Executive / Professional Programmes ( for appearing in All modules in Dec 2016 Examination)	29.02.2016
Receipt of Examination Enrollment application (for appearing in June, 2016 Examination)	25.03.2016
Acceptance of Applications for Admission to Foundation Programme ( for appearing in Dec 2016 Examination)	31.03.2016 Extended to 01.04. 2016  keeping in view the difficulties faced by the students while registering for Foundation Programme Stage during              30th / 31st March, 2016.
Receipt of Enrollment application for appearing in June,2016 Examination (with late fee)	09.04.2016
Applying for Paper-wise Exemption on the basis of qualification for June 2016 Examination.	09.04.2016
Applying for Registration De Novo / Extension of registration ( for June 2016 Examination)	09.04.2016
Acceptance of Applications for Admission to Executive/ Professional Programme ( for appearing in Single module in Dec 2016 Examination)	31.05.2016
Declaration of Results of June 2016 Examination	25.08.2016
Acceptance of Applications for Admission to Executive/ Professional Programme ( for appearing in All modules in June 2017 Examination )	31.08.2016
Receipt of examination enrollment application (for appearing in Dec, 2016 Examination)	25.09.2016
Acceptance of Applications for Admission to Foundation Programme (for appearing in June 2017 Examination)	30.09.2016
Receipt of Examination Enrollment application for appearing in Dec, 2016 Examination (with late fee)	10.10.2016
Applying for Paper-wise Exemption on the basis of Qualification for Dec 2016 Examination.	10.10.2016
Applying for Registration De Novo / Extension of registration ( for Dec 2016 Examination)	10.10.2016
Acceptance of Applications for Admission to Executive/ Professional Programme (for appearing in Single module in June 2017 Examination)	30.11.20

Updates:

1. Subsidy by way of refund of excise duty and interest for setting up a new industrial undertaking is a capital receipt and not taxable as income. [CIT vs. Shree Balaji Alloys (SC)].
2. It is date on which option for conversion of debentures into shares is exercised that open offer obligation gets triggered under the Regulations. [VICTOR FERNANDES Vs SEBI [2016] 133 CLA 1 (SAT)].
3. Mere Non Completion / Registration cannot be the reason for denying benefit U/s 54. [ Rajeev B. Shah v. ITO (ITAT Mumbai)].
4. Clarification regarding attaining prescribed Age of 60 years/80 years on 31st March itself, in case of Senior/Very Senior Citizens whose date of birth falls on 1st April, for purposes of Income-tax Act,1961. [Circular No. 28/2016-IT].
5. MCA has released Limited Liability Partnership (Amendment) Rules, 2016 vide Notification which shall come into force on the date of their publication in the official Gazette. 

6 uncommon reasons for home loan rejection

1. Builder not approved 
This is one of the most common but unexpected reasons for the rejection of a home loan application. Not all banks give loans against the property of builders. It is, therefore, critical to understand from the builders themselves which banks have approved them and which have not. 

"It's possible that when you approach a bank or a housing finance company for getting a home loan, you might come to know that the very builder is not approved by it. If that is the case, then you might not only get the shock of your life, but it will also make it impossible for you to get a home loan from the concerned bank and you may have to go to a different bank for the same," says Parth Pande, co-founder of Finance Buddha, a marketplace for retail lending products. 

2. Builder approved but property not approved 
This is another unexpected reason for a home loan rejection. A builder, for instance, may figure in a bank's list of approved builders, but a specific project launched by him may not have been approved by the concerned bank. In addition, there are likely to be cases where particular phases of a project (if it's a large one) may not have bank approval. Thus, to avoid unexpected home loan rejections, it's important to check that apart from the builder, the entire project - including its different phases - has got the necessary bank approval. 

3. Valuation-related rejections 
Imagine a scenario where one is buying a house in the resale market. Both the buyer and the seller mutually decide the price of the property and the buyer decides to go for a home loan to fund the purchase. 

"The bank or the housing finance company, however, would sanction the home loan on the basis of the valuation of the property as ascertained by it rather than the price decided by the buyer and the seller. If the valuation amount is higher than the mutually-decided price of the property, then there is no issue. However, if the value of the property is lower, then the bank may choose to give a lower loan amount than required, or may even reject the home loan application altogether," informs Pande. 

4. If previous tenant was a defaulter 
Many housing finance companies (HFCs) these days blacklist both the defaulter and his residential address. Therefore, if you are staying in a house which is in a bank's defaulters' list because of the previous tenant who defaulted on a loan or credit card payment, there are high chances of your home loan application getting rejected. However, even if a particular address is not in the defaulters' list, then there is a possibility that the very locality is not in the good books of the banks/HFCs because of some other reasons. Your loan application may get rejected in such a case. 

 5. Credit history issues 

Many people do not check their credit scores and are mostly oblivious to the same. For instance, a survey conducted by credit health improvement company Credit Sudhaar sometime back had revealed that more than 85% of the respondents were unaware of credit bureaus, while a whopping 92% didn't know their credit scores. No wonder loan rejection because of credit score issues comes as a surprise to many loan takers. 

Surprisingly, even people with a credit score of 700 and above (out of 900) are sometimes denied credit because of past mistakes. For example, there may be some old payments or charges missed by them which they have forgotten about, or they might have settled a loan long back. But the same can have a negative impact on one's credit history and this alone can lead to the rejection of a home loan. It's very important, therefore, that customers regularly check their credit scores and fix issues, if any, around their poor credit history immediately. 

6. Unstable employment 
Lenders place a lot of importance on job stability and certain banks even insist that an applicant needs to be employed with a concern for three years or more to be eligible for a home loan. 

Conclusion 
It is clear that there are many uncommon/unexpected reasons for the rejection of a home loan application, and one can't be 100% sure of getting a loan even if one is earning a handsome salary or maintains a good credit score. 

UPDATES

CBDT

The Finance Act, 2016 has amended the definition of “Distributed Income”, with effect from 01.06.2016, to mean the consideration paid by the Company on buy back of shares as reduced by the amount, which was received by the Company for issue of such shares, determined in the manner as may be prescribed. In this regard, draft rules providing for determination of amount received by Company for use of its shares under different circumstances have been formulated and uploaded on the Ministry’s website (www.finmin.nic.in) and website of the Income-tax Department (www.incometaxindia.gov.in) for comments from stakeholders and general public.

The Central Board of Direct Taxes has invited Comments/ Suggestions on draft rules. Further, Comments/ suggestions may be sent by 31st July, 2016 electronically at the email address, ustpl1@nic.in.

CBDT:

The Central Board of Direct Taxes has introduced Digital Signature Certificate (DSC) based application procedure for allotment of PAN and TAN to corporate. Under the new process PAN and TAN will be allotted within a day. This is aimed at ensuring ease of doing business.

Similarly, a new Aadhaar e-Signature based application process for Individual PAN applicants has been made available on the portals of PAN service providers M/s NSDL eGov. Introduction of Aadhaar based e-Signature through M/s NSDL eGov in PAN application not only ensures paperless hassle free PAN application process but also seeding of Aadhaar in PAN which will curb the problem of duplicate PAN to a great extent.

7 lakh tax notices to be sent for non-PAN high-value transactions

I-T dept steps up measures to check tax evasion

New Delhi, Jul 21:  

To check evasion, the Income Tax Department has decided to act on certain high-value non-PAN transactions that were reported to it under the annual information returns.

Letters will be issued to the parties of 14 lakh non-PAN transactions — forming part of identified 7 lakh high risk clusters — that are being scrutinised by the department closely, said an official release.

“The Department will be issuing letters to the parties of these transactions requesting them to provide their PAN number against these transactions,” the release added. Under the annual information returns, various high-value transactions were being reported to the department. These include reporting of cash deposits of ₹10 lakh or more in a savings bank account, sale/purchase of immovable property valued at ₹30 lakh or or more, etc. Many of these transactions do not have PAN linked to them.

For the convenience of the parties to whom these letters are addressed, a new functionality on the e-filing portal has been developed wherein they can own up transactions and provide structured response electronically.

The parties can log in to their e-filing Web site and by quoting a Unique Transaction Sequence Number provided in the letter sent to them, can link their transaction with their PAN easily.

They will also be able to give a response to this letter electronically by choosing the option of either owning up the transaction or denying the transaction as their own. The responses received from such parties online will be examined by the department. It will initiate further necessary action in those cases where no replies are received.

The Income Tax Department has details of about 90 lakh such transactions for the period 2009-10 to 2016-17.

(This article was published on July 21, 2016

Updates:

Updates:

1. Secured creditor is entitled to proceed only against the secured assets mentioned in the notice under sub-section (2) of section 13. [AXIS BankV. SBS Organics (P.) LTD. And Another [2016] 132 CLA 313 (SC)].
2. 28.07.2016 is the last date to file DVAT Returns in Form 16 & Form CST 1 for the Quarter ending 30th June, 2016.
3. Central Civil Services (Revised Pay) Rules, 2016 shall be deemed to have come into force on the 1st day of January, 2016. Notification G.S.R. 721(E) dated 25.07.2016.
4. SEBI through its Circular has asked intermediaries to upload KYC documents with the central server for all new individual accounts that will be opened from August 1.
5. Govt notifies pay scale as per 7th Pay Commission recommendations.Notification  No. 1-2/2016-IC dated 25.07.2016

Tax Saving Proof required from Employee

 

In exercise of the powers conferred by sections 192, 200 and 206C, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1.   (1) These rules may be called the Income-tax (11th Amendment) Rules, 2016.

(2) They shall come into force from the 1st day of June, 2016.

2. In the Income-tax Rules, 1962 (hereafter referred to as the said rules), after rule 26B, the following rule shall be inserted, namely:-

“26C. Furnishing of evidence of claims by employee for deduction of tax under section 192.-

(1) The assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source.

(2) The assessee shall furnish the evidence or the particulars specified in column (3), of the Table below, of the claim specified in the corresponding entry in column(2) of the said Table:-

Table

Sl. No	Nature of claims	Evidence or particulars
(1)	(2)	(3)
1.	House Rent Allowance.	Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh.
2.	Leave travel concession or assistance.	Evidence of expenditure.
3.	Deduction of interest under the head “Income from house property”.	Name, address and permanent account number of the lender.
4.	Deduction under Chapter VI-A.	Evidence of investment or expenditure.”.

3. In the said rules, in rule 30,-

(a) in sub-rule (2A), for the words “seven days”, the words “thirty days” shall be substituted;

(b) in sub-rule (4), for the portion beginning with the word “shall” and ending with the words “ has been credited”, the following words, figures, letter and brackets shall be substituted, namely:-

“shall submit a statement in Form No. 24G to the agency authorised by the Principal Director of Income-tax (Systems) in respect of tax deducted by the deductors and reported to him.”;

(c) after the sub-rule (4), the following sub-rules shall be inserted, namely:-

“(4A) Statement referred to in sub-rule (4) shall be furnished-

(a) on or before the 30th day of April where the statement relates to the month of March; and

(b) in any other case, on or before 15 days from the end of relevant month.

(4B) Statement referred to in sub-rule (4) shall be furnished in the following manner, namely:-

(a) electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5); or

(b) electronically alongwith the verification of the statement in Form 27A or verified through an electronic process in accordance with the procedures, formats and standards specified under sub-rule (5).

(4C) The persons referred to in sub-rule (4) shall intimate the number (hereinafter referred to as the Book Identification Number) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited.”;

(d) for sub-rule(5) , the following rules shall be substituted, namely:-

“(5) The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day-to-day administration in relation to furnishing of the information and verification of the statements.”.

4. In the said rules, in rule 31A, for sub-rule (2), the following sub-rule shall be substituted, namely:-

“(2) Statements referred to in sub-rule (1) for the quarter of the financial year ending with the date specified in column (2) of the Table below shall be furnished by the due date specified in the corresponding entry in column (3) of the said Table:

Table

Sl. No.	Date of ending of quarter of financial year	Due date
(1)	(2)	(3)
1.	30th June	31st July of the financial year
2.	30th September	31st October of the financial year
3.	31st December	31st January of the financial year
4.	31st March	31st May of the financial year immediately following the financial year in which the deduction is made”.

5. In the said rules, in rule 37CA,-

(a) in sub-rule (3), for the portion beginning with the word “shall” and ending with the words “ has been credited”, the following words, figures, letter and brackets shall be substituted, namely:-

“shall submit a statement in Form No. 24G to the agency authorised by the Principal Director of Income-tax (Systems) in respect of tax collected by the collectors and reported to him.”;

(b) after sub-rule (3),the following sub-rules shall be inserted, namely:-

“(3A) Statement referred to in sub-rule (3) shall be furnished-

(a) on or before the 30th day of April where the statement relates to the month of March; and

(b) in any other case, on or before 15 days from the end of relevant month.

(3B) Statement referred to in sub-rule (3) shall be furnished in the following manner, namely:-

(a) electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (4); or

(b) electronically along with the verification of the statement in Form 27A or verified through an electronic process in accordance with the procedures, formats and standards specified under sub-rule (4).”;

(c) for sub-rule(4), the following sub-rule shall be substituted, namely:-

“(4) The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day-to-day administration in relation to furnishing of the information and verification of the statements.”.

6. In the said rules, in Appendix II,-

(a) after Form 12 BA, the following form shall be inserted, namely:-

“FORM NO.12BB

(See rule 26C)

Statement showing particulars of claims by an employee for deduction of tax under section 192

1. Name and address of the employee:

2. Permanent Account Number of the employee:

3. Financial year:

Details of claims and evidence thereof
Sl. No.	Nature of claim		Amount(Rs.)	Evidence/ particulars
(1)	(2)		(3)	(4)
1.	House Rent Allowance:(i) Rent paid to the landlord (ii) Name of the landlord (iii) Address of the landlord (iv) Permanent Account Number of the landlord Note: Permanent Account Number shall be furnished if the aggregate rent paid during the previous year exceeds one lakh rupees
2.	Leave travel concessions or assistance
3.	Deduction of interest on borrowing:(i) Interest payable/paid to the lender (ii)Name of the lender (iii) Address of the lender (iv) Permanent Account Number of the lender (a) Financial Institutions(if available) (b) Employer(if available) (c) Others
4.	Deduction under Chapter VI-A(A) Section 80C,80CCC and 80CCD (i) Section 80C (a) …………….. (b) …………….. (c) …………….. (d) …………….. (e) …………….. (f) …………….. (g) …………….. (ii) Section 80CCC (iii) Section 80CCD (B) Other sections (e.g. 80E, 80G, 80TTA, etc.) under Chapter VI-A. (i) section………………. (ii) section………………. (iii) section……………… (iv) section………………. (v) section……………….
	Verification
	I,…………………..,son/daughter of……………………….. do hereby certify that the information given above is complete and correct.
	Place………………………………………….
	Date……………………………………………	(Signature of the employee)
	Designation ……………………………….….	Full Name:………………”;

(b) in the Form No. 24G, in point 7, under the heading “Details of State”, after Tamil Nadu at serial number 31 and before Tripura at serial number 32, the figures, letter and word “31A. Telangana” shall be inserted;

(c) in Form No. 24Q, in Annexure-II, after entry 356, the following shall be inserted, namely:-

357	In case of House Rent Allowance claim-Name and Permanent Account Number of the landlord if aggregate payment during the previous year exceeds rupees one lakh
358	In case of deduction of interest under the head “Income from House property” – Name and Permanent Account Number of the lender ( if available)”;

(d) in Form No. 26Q, in the Annexure, in Notes, in point 7, under the heading “List of section codes is as under”, before section 193, the following shall be inserted, namely:-

1	2	3
192A	Payment of accumulated balance due to an employee	192A”;

(e) in Form No. 27Q, in the Annexure, in Notes, in point 4, under the heading “List of section codes is as under”, before section 194E, following shall be inserted:-

1 2 3 192A Payment of accumulated balance due to an employee 192A

COMPANY DEPOSITS – REVIEW OF COMPANIES ACCEPTANCE OF DEPOSITS (AMENDMENT) RULES, 2016

[2016] 133 CLA (Mag.) 1
Surendra U Kanstiya^*

Rules on acceptance of deposits by the corporate sector have been amended on 29th June 2016. Whereas few relaxations have been introduced, certain obligations have also been imposed on the companies accepting the deposits. In this article, major changes introduced through the Companies (Acceptance of Deposits) Amendment Rules, 2016 have been analysed.

INTRODUCTION

1. Activities relating to acceptance of deposits by companies are regulated by Chapter V of the Companies Act, 2013 (the Act) and the Companies (Acceptance of Deposits) Rules, 2014 (‘the Rules’). Time and again these Rules have been amended by the Ministry of Corporate Affairs (‘MCA’). On 29th June 2016 the MCA has again issued a notification and the Companies (Acceptance of Deposits) (Amendment) Rules 2016 (‘the Amendment Rules’) have been notified.

EXEMPT DEPOSITS

2. According to rule 2(1)(c), the ‘deposit’ includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include certain receipts as listed under the rule. That rule gives 14 types of transactions which are specifically excluded from the ambit of ‘deposit’ and they are generally known as exempt transactions. The Amendment Rules have amended four such exempt transactions and added five new exempt transactions. As a result, with effect from 29th June 2016, nineteen types of transactions would be outside the purview of ‘deposit’ under the Act. The same is explained below :

AMENDMENT TO EXISTING EXEMPT TRANSACTIONS

3. Four exempt transactions already existing in the list of transactions that are not to be treated as deposit have been amended. The same are as follows:
   • Compulsorily convertible instruments - Existing exemption available under rule 2(1)(c)(ix) was available to amount raised by issue of secured bonds or debentures which are compulsorily convertible into shares of the company within five years. Now the duration of five years has been extended to ten years.
   • Amount in trust - Existing exemption available under rule 2(1)(c)(xi) available to any non-interest bearing amount received or held in trust is now restricted and would be available only to any non-interest bearing amount received and held in trust.
   • Advances received - Existing exemption available under rule 2(1)(c)(xii) to the advance received in the course of business is extended to three more categories. The same are as follows :
     • As an advance towards consideration for future services in the form of a warranty or maintenance contract as per written agreement or arrangement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less.
     • As an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government.
     • As an advance for subscription towards publication, whether in print or in electronic media to be adjusted against receipt of such publications.
     Of course, like other categories falling under rule 2(1)(c)(xii), these advances shall also be deemed to be deposits on the expiry of fifteen days from the date they become due for refund.
   • Nidhi companies - Explanation to the existing exemption available to nidhi companies under rule 2(1)(c)(xiv) has been stretched further. Now in certain situations, any additional contributions made by the company as part of the promise or offer, shall also be considered as deposits.

CREATION OF NEW EXEMPT TRANSACTIONS

4. Five more categories have been added to the list of transactions that are not to be treated as deposit. The same are as follows :
   • Listed unsecured non-convertible debentures – Any amount raised by issue of non-convertible debenture not constituting a charge on the assets of the company and listed on a recognized stock exchange as per applicable regulations made by Securities and Exchange Board of India [rule 2(1)(c)(ixa)].
   • Chit subscriptions – Any amount received by way of subscription in respect of chit under Chit Fund Act, 1982 [rule 2(1)(c)(xv)].
   • Collective investment schemes – Any amount received by the company under any collective investment scheme in compliance with regulations framed by the Securities and Exchange Board of India [rule 2(1)(c)(xvi)]
   • Start-up company – An amount of Rs.25 lakh or more received by a start-up company by way of a convertible note (convertible into equity shares or repayable within a period of not exceeding five years from the date of issue) in a single tranche from a person [rule 2(1)(c)(xvii)];
   • SEBI registered funds – Any amount received by a company from Alternate Investment Funds, Domestic Venture Capital Funds and Mutual Funds registered with the Securities and Exchange Board of India in accordance with regulations made by it [rule 2(1)(c)(xviii)].

QUANTUM OF DEPOSITS

5. The threshold on amount of deposits that can be accepted or renewed by a company from its members has now been increased further. Now quantum of such deposits can go up to 35 per cent of the aggregate of the paid-up share capital, free reserves and securities premium account of the company. A proviso has also been added to rule 3(3) which permits a private company to accept from its members monies not exceeding 100 per cent of aggregate of the share capital, free reserves and securities premium account. Such private companies are mandated to file the details of moneys so accepted to the Registrar in such manner as may be specified. This exemption is in line with the privileges given to the private companies by the Ministry of Corporate Affairs vide notification dated 5th June 2015 [2015] 126 CLA (St.) 207.

CREDIT RATING LINKED TO NBFC DIRECTIONS

6. Rule 3(8) mandates every eligible company accepting public deposits to obtain, at least once in a year, credit rating for deposits accepted by it. It has now been provided that the credit rating in such case, shall not be below the minimum investment grade rating or other specified rating for fixed deposits, from any one of the approved credit rating agencies as specified for non-banking financial companies in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions 1998, issued by the Reserve Bank of India, as amended from time-to-time.

PUBLICATION OF CIRCULAR

7. Every eligible company intending to invite deposits shall now be required to issue a circular in the form of an advertisement in English language in an English newspaper having countrywide circulation. Moreover the company shall also place such circular on the website of the company, if any.

DEPOSIT INSURANCE

8. A proviso has been added to rule 5(1) permitting the companies to accept the deposits without deposit insurance contract till the 31st March, 2017 or till the availability of a deposit insurance product, whichever is earlier.

DISCLOSURE IN FINANCIAL STATEMENT

9. A new rule 16A has been inserted requiring the deposit accepting companies to make following disclosure by way of notes in the financial statement :
   • Every company, other than a private company, shall disclose about the money received from the director
   • Every private company, shall disclose about the money received from the directors or relatives of directors

DISCLAIMER IN FORM DPT-1

10. A company allowed to accept deposits from its members is required to issue a circular in Form DPT-1. Every eligible company intending to invite deposits is required to publish a circular in the form of an advertisement in Form DPT-1. Form DPT-1 contains the details about the company and its financial position, details of outstanding deposits, particulars of deposit scheme, etc. Now Form DPT-1 shall also contain a disclaimer clause reading as under :
    “It is to be distinctively understood that filing of the circular or circular in the Form of advertisement with Registrar should not in any way be deemed or construed that the same has been cleared or approved by the Registrar or the Central Government. The Registrar or the Central Government does not take any responsibility either for the financial soundness of any deposit scheme for which the deposit is being accepted or invited or for the correctness of the statements made or the opinions expressed in circular or circular in the Form of advertisement. The depositors should exercise due diligence before investing in deposit schemes.”

CONCLUSION

11. A significantly large number of companies have been enjoying the privilege available to them in the form of acceptance of deposits. Relaxation in the relevant norms would certainly benefit them. At the same time, large number of deposit holders are being taken for a ride every year and the only way to protect their interest is by disciplining the deposit taking activities of the companies. In a way, notification of the Amendment Rules is an attempt to attain both these objectives