PROVISION – ACCEPTANCE OF LOAN FROM SHAREHOLDERS - Specifically Private Limited Companies
PROVISION – ACCEPTANCE
OF LOAN FROM SHAREHOLDERS
Specifically Private
Limited Companies
In
this editorial author discussing about Provisions
of loan from shareholders by Private Limited Company, Process of acceptance of loan from shareholder, Treatment of such loan
in DPT-3, Balance Sheet etc.
There
are many ambiguity in the corporate and professionals about treatment of Loan
from shareholder, whether considered as deposit or not?
Section/ Rules Involved:
|
a.
|
Section 73
|
Prohibition on Acceptance of Deposit and relevant
rules
|
|
b.
|
Section 179
|
Power of Board of Directors and relevant rules
|
Important - Circular/
Notification Involved:
|
a.
|
Exemption Notification Dated 05th June,
2015
|
|
b.
|
Exemption Notification Dated 13th June,
2017
|
Forms Involved:
|
a.
|
MGT-14
|
Within 30 days of passing of resolution, if required
|
|
b.
|
DPT-3
|
Every year till 30th June
|
Extract
of section/ Rules/ Circular shall be mentioned at the end of the articor link
shall be provided for the same.
A. PROVISIONS – LOAN FROM
SHAREHOLDER:
PRIVATE LIMITED COMPANIES
ü Under
Companies Act, 1956 it was allowed to accept loan from the Shareholders and
such loan considered as non-deposit.
ü Under
Companies Act, 2013 since 01st April, 2014 it was not allowed to accept
deposit from shareholder
ü MCA
issue Exemption notification for
Private Limited Companies on 05th June, 2015 states that:
“Chapter V, clauses (a) to (e) of sub-section (2) of section 73, Shall not apply to a private company which accepts from its members monies not exceeding one hundred per cent, of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.”
ü MCA
issue Exemption notification for
Private Limited Companies on 13th June, 2017 states that:
“Chapter
V, clauses (a) to (e) of sub-section (2) of section 73, Shall not apply to a
private company which fulfils all of the following conditions ; namely-
(a) which is not an associate or a subsidiary
company of any other company
(b) if the
borrowings of such a company from banks or financial institutions or any body
corporate is less than twice of its paid up share capital or fifty crore
rupees, whichever is lower; and
(c) such
a company has no default in repayment of such borrowings subsisting at the time
of accepting deposits under this section.”
However, one can opine
that
|
S.
No.
|
Date
From - To
|
Provisions
|
|
|
I.
|
01-04-2014
|
05-06-2015
|
Not
allowed to accept loan from shareholders
|
|
II.
|
05-06-2015
|
13-06-2017
|
Allowed
to accept loan from shareholders upto 100% of paid up share capital and free
reserve (subject to exemption of some compliances)
|
|
III.
|
13-06-2017
|
Continue…
|
Allowed
to accept loan from shareholders any limit if fulfill three conditions
mentioned above.
|
B. PROCESS – ACCEPTANCE OF LOAN
FROM SHAREHOLDER:
If
private limited company wants to accept loan from the shareholders then such
company have to follow the following below mentioned procedure.
STEP-1
To
check whether company falls in exemption limit of 05.06.2015 or 13.06.2017 to
calculate the amount which such company can accept from shareholders.
STEP-2
ü To
Hold a Meeting of Board of Director u/s 179(3)
ü To
Pass Board Resolution for Borrowing
ü To
issue notice for calling of General Meeting u/s 73(2)
STEP-3
ü To
Hold a Meeting of Shareholders u/s 73(2)
ü To
Pass ordinary resolution to accept loan from shareholder
STEP-4
Company shall file e-form DPT-3 for such loan at the
time of acceptance of same.
STEP-5
Company
shall file e-form DPT-3 every year for such loan on or before 30th
June.
C. TREATMENT–LOAN FROM
SHAREHOLDER:
As per provisions mentioned above Private Limited Company
can accept loan from shareholders subject to exemption of compliance of Section
73(2) provision (a) to (e).
However, such loan from shareholder is no where mentioned under
exemption list of definition of Deposit.
First:
Therefore, one can opine that,
Loan received from
shareholder shall be considered as deposit for Private Limited Company.
However, such PVT Company can accept the same subject to above mentioned
exemptions.
Second:
ü Every
year while filing e-form DPT-3 Company has to show such loan in category of
Deposit;
ü Company
have to select remote button no. 2 or 4
ü Company
has to attach certificate of Statutory Auditor for the same.
D. CONSEQUENCIES:
a)
Fine on Contravention
on Section 73:
The company shall,
§ 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 or twice the amount of deposit accepted by the
company, whichever is lower rupees but which may extend to ten crore rupees; and
§ every officer of the company who is in default
shall be punishable with imprisonment which may extend to seven years and
with fine which shall not be less than twenty-five lakh rupees but which
may extend to two crore rupees,
b)
Punishment for non
filing of DPT-3: Rule 21
The Company and every officer of the company who
is in default shall be punishable with fine which may extend to five thousand
rupees and where the contravention is a continuing one, with a further fine
which may extend to five hundred rupees for every day after the first day
during which the contravention continues
(Author – CS Divesh
Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi
and can be contacted at csdiveshgoyal@gmail.com). Disclaimer:
The
entire contents of this document have been prepared on the basis of relevant
provisions and as per the information existing at the time of the preparation.
Although care has been taken to ensure the accuracy, completeness and
reliability of the information provided, I assume no responsibility therefore.
Users of this information are expected to refer to the relevant existing
provisions of applicable Laws. The user of the information agrees that the
information is not a professional advice and is subject to change without
notice. I assume no responsibility for the consequences of use of such
information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION
WITH THE USE OF THE INFORMATION
Could you please put some lights on the following issues:
ReplyDelete1.Suppose the Pvt.Ltd Co. is a wholly owned subsidiary of Foreign Company and the foreign company send monies for set up office and infrastructure which is more than the paid-up capital and free reserves?
2. All the shares are held by the foreign company, so how the point B.Process -Acceptance of loan from shareholders apply?
kindly advice
I agree with a lot of the points you made in this article. If you are looking for the bridging loan office, then visit Tiger Financial Ltd. I appreciate the work you have put into this and hope you continue writing on this subject.
ReplyDelete