Loans, Deposits & Exemptions under Companies Act, 2013: Clearing the Confusion

The Companies Act, 2013 lays down strict provisions for acceptance of deposits by companies. Sections 73–76 and the Companies (Acceptance of Deposits) Rules, 2014 regulate this area. However, the framework also provides specific exemptions for private companies.

These exclusions often create confusion, particularly around shareholder and director loans.

1. Loan from director or director's relative:

  • Rule 2(1)(c)(viii): Any amount received from a person who, at the time of receipt, was a director or a director's relative, is not considered a deposit.

  • Conditions:

    • Only applicable to private companies.

    • Disclosure in Board’s Report.

    • Obtain a declaration that the loan has been given out of own funds, and not being given out of funds acquired by him/ her by borrowing or accepting loans or deposits from others.  . 

2. Loan from shareholders

MCA Notification No. GSR- 583(E) dated 13th June, 2017 granted further relief to private companies by exempting them from Section 73(2)(a) to (e) if they meet certain criteria.


(A) Private company accepting from members monies ≤ 100% of:

  • Paid-up share capital,

  • Free reserves,

  • Securities premium account.

(B) Start-up companies (for 5 years from incorporation).

(C) Private companies fulfilling ALL conditions:

  1. Not an associate/subsidiary of another company,

  2. Borrowings < 2x paid-up share capital or ₹50 crore (whichever lower),

  3. No default in repayment of borrowings at the time of accepting deposits.

📌 Important: Even these exempt companies must file details of monies accepted with the Registrar.

3. Where lender is both shareholder and director:

Here, the same person falls in two exempted categories.

  • You don’t need to comply with both sets of conditions separately. It is sufficient if the loan falls under either exemption.

  • For practical compliance, companies usually choose the more straightforward category (here, “director loan”), but in disclosure, they may indicate both bases to avoid ambiguity.

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