Loan From Shareholders & its Treatment

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MCA Forms > DPT-3

Loan From Shareholders & its Treatment
Category: DPT-3, Posted on: 24/04/2023 , Posted By: CS Divesh Goyal

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LOAN FROM SHAREHOLDERS AND ITS TREATMENT IN DPT-3

SHORT SUMMARY:

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 ambiguities in the corporate and professionals about treatment of Loan from shareholder, whether considered as deposit or not?

Section/ Rules Involved:

	Section 73	Prohibition on Acceptance of Deposit and relevant rules
	Section 179	Power of Board of Directors and relevant rules

Important - Circular/ Notification Involved:

	Exemption Notification Dated 05^th June, 2015
	Exemption Notification Dated 13^th June, 2017

Forms Involved:

	MGT-14	Within 30 days of passing of resolution, if required
	DPT-3	Every year till 30^th June

Extract of section/ Rules/ Circular shall be mentioned at the end of the article link shall be provided for the same.

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 01^st April, 2014 it was not allowed to accept deposit/ Loan from shareholder

ü MCA issue Exemption notification for Private Limited Companies on 05^th 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 13^th 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.

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

ü Company shall file e-form DPT-3 every year for such loan on or before 30^th June.

TREATMENT–LOAN FROM SHAREHOLDER:

Where to mention loan from shareholder in e-form DPT-3?

As e-form DPT-3 divided under four remote buttons:

Onetime Return for disclosure of details of outstanding money or loan received by a company but not considered as deposits in terms of rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014
Return of Deposit
Particulars of transactions by a company not considered as deposit as per rule 2 (1) (c) of the Companies (Acceptance of Deposit) Rules, 2014

Return of Deposit and Particulars of transactions by a company not considered as deposit

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 nowhere 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 As loan from shareholder shall be considered as deposit even for private limited Companies.

ü Therefore, if companies having loan from shareholders as on March 31, they have to select remote button no. 2 i.e. ‘Return of Deposit’ to show this amount.

ü One can opine that to show loan from shareholder Company always will select Remote Button No. 2 or Remote Button no. 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).

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