The Ministry of Corporate Affairs (MCA) has notified further amendments in Deposit Acceptance Rules. The key highlights are as under:
· In order to open up investment routes in start-ups, amounts of Rs. 25 lakh or more received by a start-up company by issuing convertible note, convertible to equity or refundable within 5 years, have been excluded from the purview of deposits under the Companies Act.
· Companies can now accept deposits from members (including other outstanding deposits)upto 25 percent of their paid up capital and free reserves as against the earlier limit of 35 percent. For Private Companies the limit has been increased to 100 percent.
· Companies are now required to make following disclosures, by way of notes, in their financial statements:
o Private Companies: Money received from directors or their relatives
o Public Companies: Money received from directors
· Time period of Compulsorily Convertible Debentures has been increased from five years to ten years.