The Corporate Affairs Ministry (MCA) has softened the 'deposits' blow on private companies.
It has now clarified that amounts received prior to April 1, 2014 by such entities from their members, directors or their relatives will not be considered as "deposits" under the new company law.
This would mean that private companies-or the amount collected from directors, members before April 1, 2014 - would not be required to conform to the stringent conditions specified for deposits' acceptance under the new company law enacted in 2013.
Under the Companies Act 1956, any amount received by a private company from its members, directors or their relatives were not treated as 'deposits' (under Section 58A of that Act).
With the new company law bringing stringent conditions around acceptance of deposits, several stakeholders had raised doubts as to whether amounts received - prior to April 1, 2014 - by private companies from their members, directors or their relatives will be considered as "deposits" under the new law.
While the corporate affairs ministry has given these companies a breather, it has however stipulated that the private company should disclose in the notes to its financial statements (for the financial year commencing on or after April 1, 2014) the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement.
Practising Company Secretary
Chennai
Mobile 93810 11200
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