New Delhi: The government has extended the deadline for corporates to comply with norms to insure deposits taken by them in the absence of appropriate insurance products.
The Companies Act, 2013, mandates firms taking deposits to insure those amounts, as part of efforts to curb instances of illegal money pooling activities as well as protect the interest of investors.
However, an appropriate product to ensure compliance is yet to be made available in the domestic insurance industry.
To address the practical difficulties faced by companies, the Corporate Affairs Ministry has amended the rules governing acceptance of deposits under the Act.
"... Companies may accept deposits without deposit insurance contract till March 31, 2016 or till availability of a deposit insurance product, whichever is earlier," the Ministry said in a notification issued on Tuesday.
A transition period of one year till March 31, 2015, was given to companies to comply with deposit insurance norms.
Earlier, the Ministry -- which is implementing the Act -- had written to RBI and IRDA with regard to the deposit insurance issue.
Most provisions of the new Act had come into force from April 1, 2014.
Apart from extending the deadline, the Ministry said companies that have raised deposits before April 1, 2014 and related allotment is pending on March 31, 2015, should either return the money or comply with the new deposit taking norms.
Such companies "shall, by June 1, 2015, either return such amounts to the persons from whom these were received or allot shares, stock, bonds or debentures or comply with these rules", the Ministry said.
It would be applicable for companies, which has received any amount through subscription to any shares, stocks, bonds or debentures before April 1, 2014 and the same has been disclosed in the balance sheet for the financial year ended March 31, 2014 against which the allotment is pending on March 31, 2015.
The applicability would also depend on whether there are some other requirements under the Companies Act, 1956 or Sebi Act to make allotment within a specified period.
According to the Ministry, every company need to get a credit rating for the deposits at least once in a year.
The changes are part of the Companies (Acceptance of Deposits) Amendment Rules, 2015.
