The Corporate Affairs Ministry (MCA) has amended its acceptance of deposits rules so as to bring in transparency and enhance the role and responsibilities of statutory auditors .

The MCA’s move will widen the responsibility of deposit rules compliance from directors to include statutory auditors, said company law experts.

The Amendment to the Companies (Acceptance of Deposits) Rules, 2022 — which came into effect on August 29 — will bring greater transparency on acceptance and receipt of amounts by companies as deposits and also amounts received by companies, but not treated as deposits, they added.

Manish Gupta, Partner, IndusLaw, said: “Now, auditors will be in the front seat, where they would also need to confirm compliance with MCA guidelines. Earlier, only companies and directors had to confirm such compliance to the MCA; now, auditors also have to confirm compliance of the deposit rules to the MCA. This is applicable to all companies, whether private or public”

Annual return of deposits

Sharad Abhyankar, Partner, Khaitan & Co, said now private companies will also be required to file Annual Return of Deposits.  Prior to the amendment, private companies were required to make a disclosure in the annual financial statements about the moneys received from directors or relatives of directors.

MCA has amended Form DPT-3, which requires detailed classification of amounts from different types of lenders and depositors, as well as the opening and closing balanceof deposits during the previous financial year. The amendment of the rules enhances the responsibility of the statutory auditors.  

“Previously, statutory auditors were required to audit the information contained in Form DPT-3 (Annual Return).  Post the amendment, the statutory auditors are required to make a declaration within Form DPT-3 that the ‘particulars of deposits’ and ‘particulars of liquid assets’ are correct and are in line with the relevant provisions of the Companies Act, 2013.  Any false statement by the company as well as the statutory auditors could be treated as a fraud punishable under Section 448 of the Companies Act, 2013,” Abhyankar said.

Bambi Bhalla, Emissary Counsel - Cornellia Chambers, said the amendment to the seposits acceptance rules would require companies to provide detailed disclosures with respect to exempted deposits in the revised forms. 

Such disclosures should contain information pertaining to opening balance, additional loans during the year, repayments during the year, any other adjustment, closing balance and ageing of the loan outstanding for less than a year or 1 to 3 years or more than 3 years, Bhalla said.

“Companies are also required to furnish information pertaining to liquid assets. Further, statutory auditors are required to submit a declaration with respect to the exempted deposits and liquid assets. This move will help ensure greater transparency in reporting obligations,” Bhalla added.