acceptance of deposits by start-ups

MCA circular dated 7th September, 2020 amending the Companies (Acceptance of Deposits), Rules, 2013 allowing start up companies to accept deposits upto a period of 10 years from the date of their incorporation. Start-ups, of course is defined in the DIPP guidelines to that effect, which is now known as Department for promotion of Industry and Internal Trade.

Start-ups can accept deposits of an amount of Rs.25 lakhs or more by way of convertible note, convertible into equity shares or repayable within a period not exceeding 10 years from the date of issue in a single tranche;

Further maximum limit for acceptance of deposits under section 73 of the Companies Act, 2013 shall not apply to a private company which is a start for a period of 10 years from the date of its incorporation.

Hitherto, the period in both the cases was 5 years.

Copy of MCA circular can be found at MCA site.

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