Amounts received by private companies from their members, directors or their relatives before 1st April, 2014 will not be treated as deposit

After the notification of section 73 & 74 of the Companies Act 2013 there was huge uncertainty among the Corporates specifically private companies as to whether amounts received by private companies from their members, directors or their relatives prior to 1stApril, 2014 shall be considered as deposits under the Companies Act, 2013 as such amounts were not treated as ‘deposits’ under section 58A of the Companies Act, 1956 and rules made thereunder.

After receiving various representation in the said matter , MCA vide circular no 02/2015 dated 30th March 2015 has clarified that such amounts received by private companies prior to 1st April, 2014 shall not be treated as ‘deposits’ under the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 subject to the condition that relevant private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement.

Any renewal of acceptance of fresh deposits on or after 1st April, 2014, shall however, be in accordance with the provisions of Companies Act, 2013 and rules made thereunder.

Though this Circulars provides the much needed relief to private companies but does not this also mean that if such amount was received by a public company even though they were not treated as deposits under the Companies Act, 1956 it will be treated as deposit under Companies Act, 2013.