Professional Documents
Culture Documents
LOANS, ADVANCES,
INVESTMENTS &
DEPOSITS
Organised By:
SIRC of ICAI
Pinnacle One Day CPE Seminar on
the Companies Act, 2013
Sunday, 6th JULY, 2014
Presented By:
CS. S. DHANAPAL
FLOW OF PRESENTATION
Borrowings
Loans to
director etc
Loans and
Investments
CS. S. DHANAPAL
Deposits
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BORROWINGS
Sec 180 - The Board of Directors of a company shall with the consent of
the company by a special resolution, borrow money, if
Money to
be
borrowed
Money
already
borrowed
CS. S. DHANAPAL
BORROWINGS
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repayable on demand or
6 months from the date of the loan
such as short-term,
cash credit arrangements,
the discounting of bills and
the issue of other short-term loans of a seasonal
character, but
does not include loans raised for the purpose of
financial expenditure of a capital nature;
within
CS. S. DHANAPAL
DEFAULTS IN REPAYMENT
Company if defaults in repayment of loan and
advances, its restricts to
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Loan to Shareholder
Loan given to shareholder holding more than 10% of voting power
could be deemed to be dividend. Section 2(22)(e) of IT Act reads as
under:
In this Act, unless the context otherwise requires
(22) dividend includes:
(e) any payment by a company, not being a company in which the
public are substantially interested, of any sum (whether as
representing a part of the assets of the company or otherwise)
[made after the 31st day of May, 1987, by way of advance or loan
to a shareholder, being a person who is the beneficial owner of
shares (not being shares entitled to a fixed rate of dividend whether
with or without a right to participate in profits) holding not less
than ten per cent of the voting power, or to any concern in which
such shareholder is a member or a partner and in which he has a
substantial interest (hereafter in this clause referred to as the said
concern)] or any payment by any such company on behalf, or for
the individual benefit, of any such shareholder, to the extent to
which the company in either case possesses accumulated profits ;
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Individual
director of the
lending company,
Firm
Company
any private
company of which
any such director
is a director
any private
company of which
any such director
is member
Director of the
holding company
any partner of
director
relative of any
such director
CS. S. DHANAPAL
Body
corporate
any body corporate, the
Board of directors,
managing director or
manager, whereof is
accustomed to act in
accordance with the
directions or
instructions of the
Board of any director or
directors of the lending
company
any body corporate at
a general meeting of
which not less than
25% of the total voting
power may be
exercised or controlled
by any such director, or
by two or more such
directors, together;
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CS. S. DHANAPAL
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CS. S. DHANAPAL
In case of Contravention
the company with fine Rs.5 Lakh -25 Lakh
the director or the other person to whom any
loan is advanced or guarantee or security is
given or provided in connection with any loan
taken by him or the other person, shall be
punishable with imprisonment Upto 6 months or
with fine which with fine Rs.5 Lakh -25 Lakh or
both
CS. S. DHANAPAL
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CS. S. DHANAPAL
Not exceeding
60% of its paid-up
share capital, free
reserves and
securities premium
account
whichever
is more
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Register
Register to be maintained in Form MBP 2 for
Loan given
Guarantee provided
Securities given
Acquisitions made
Entries to be made within 7 days
Entries to be made in chronological order
Shall be authenticated by CS or any authorised person
Can be maintained electronically
CS. S. DHANAPAL
Contravention
If a company contravenes the provisions of
section 186, shall be punishable
Company - with fine of Rs. 25000 to 5 Lakh
Every officer - imprisonment for a term - Upto 2
years and with fine of Rs. 25000 to 1 Lakh
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CS. S. DHANAPAL
Independent
Director
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Mandatory
auditor
rotation
Every Listed Company and the class of companies shall mean the following classes of companies
excluding one person companies and small companies:(a) all unlisted public companies having paid up share capital of rupees ten crore or more;
(b) all private limited companies having paid up share capital of rupees twenty crore or more;
(c) all companies having paid up share capital of below threshold limit mentioned in (a) and (b)
above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty
crores or more.
CS. S. DHANAPAL
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DEPOSITING
SHARES OR
SECURITIES
With any person by way
of security for the
repayment of loan /
performance of any
obligation
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DEPOSITS
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MEANING OF DEPOSIT
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Exempted amounts
Any amount received
against issue of commercial paper or any other instruments as per RBI guidelines
from a person who, at the time of the receipt of the amount, was a director of the company
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(Secured or
in the course of, or for the purposes of, the business of the
company:
As advance for goods/services, provided it is appropriated
within 365 days
As advance for property provided it is appropriated as per
terms of agreement for property
Security deposit for performance of contracts
As advance received under long term projects for supply of
capital goods
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Classification of Companies
for purpose of Deposits
Eligible
Company
Other
Company
CS. S. DHANAPAL
Eligible Company
eligible company means a public company as referred to in sub-section
(1) of section 76,
having a net worth of not less than Rs. 100
Crores or a turnover of not less than Rs. 500
Crores and
which has obtained the prior consent of the
company in general meeting by means of a
special resolution and (ordinary resolution
sufficient if within limit under sec 180)
also filed the said resolution with the Registrar of
Companies
before making any invitation to the Public for
acceptance of deposits
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Other
Company
Eligible
Company
From
Members
From
Public
From
Member
From
Public
From
members
and public
Not exceeding
10% of aggregate
paid-up capital
and free reserve
Not exceeding
25% of aggregate
paid-up capital
and free reserve
Not exceeding
25% of aggregate
of paid-up capital
and free reserve
Cannot accept
any deposit from
public
Not exceeding
35% of aggregate
paid-up capital
and free reserve
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CONDITIONS TO BE SATISFIED
FOR ACCEPTING DEPOSITS
Atleast 30 days prior to circulation, copy to be filed with
ROC signed by majority of directors.
Deposit insurance to be taken atleast 30 days prior to
issue of circular/advertisement.
Circular/Advertisement valid only for 6 months from
close of FY or till AGM. Every year fresh circular to be
issued.
Company to provide application form to the depositors
for applying for deposit.
Company to provide no default certification.
CS. S. DHANAPAL
deposits,
the
quote them as
Deposit
repayment
reserve
account
to
be
created/maintained and atleast 15% of deposits
maturing during current financial year and ensuing
financial year to be transferred latest by 30th April of the
financial year.
Deposit receipt to be issued within 21 days of receipt of
money.
Register of deposits to be maintained and entry to be
made within 7 days of issuance of receipts.
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Return of Deposit
Return in Form DPT 4
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Quantum
Does not exceed
10% of the
aggregate of
paid up share
capital and free
reserves
Repayable
not earlier than 3
months from the
date of deposit
or renewal
CS. S. DHANAPAL
Penal Provisions
Failure to repay deposit or interest thereon accepted
before commencement of this Act
Company:
In addition to the payment of the amount of deposit or
part thereof and the interest due, be punishable with fine
which shall not be less than one crore rupees but
which may extend to ten crore rupees
every officer of the company who is in default:
imprisonment which may extend to seven years or with
fine which shall not be less than twenty-five lakh
rupees but which may extend to two crore rupees, or
with both.
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Penal Provisions
Failure to repay deposit or interest thereon accepted
before commencement of this Act
Penalty for fraud
Penal Provisions
Failure to repay deposit or interest thereon
accepted after commencement of this Act
Depositor may apply to Tribunal seeking order for
repayment
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