ABC Private Ltd., a 'start-up' company, received an amount of ₹ 25 lakh in a single tranche from an investor by way of a Note, convertible into equity shares (convertible after 3 years but within 5 years from the date of

Yes, the view of the CFO is correct. As per the provisions of Companies (Acceptance of Deposit) Rules, 2014, an amount of ₹ 25 lakhs or more received by a Start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person shall not be treated as a deposit. Further, as per the exemption notification dated June 05, 2015, issued by the Ministry of Corporate Affairs, the provisions of clauses (a) to (e) of Section 73 of the Act shall not apply to a start-up company for five years from the date of incorporation. In view of the said provision, the view of the CFO that the amount of ₹ 25 lakh received from an investor, by way of Note convertible into equity after 3 years but before 5 years is not a deposit, is correct.