Acceptance of Deposits by Companies

ACCEPTANCE OF DEPOSITS
BY COMPANIES
From:- B. K. Gupta & Associates, Company Secretaries

Email ID- bkg.majestic@gmail.com Phone no.- 9780016901
Introduction
Chapter V of the Companies Act
2013.
Consisting Sections 73 to 76
Deals with acceptance of deposits by
the Companies
Implemented w.e.f. 01.04.2014

Prohibition on acceptance of deposits

from public. (Section 73)
(Corresponding to Section 58A)
On and after the commencement of this
Act, no company shall invite, accept or
renew deposits under this Act from the
public except in a manner provided under
this Chapter.

Nothing contain in this sub-section

shall apply to:
a Banking Company
Non Banking Financial Company (NBFC) as
defined in the Reserve Bank of India Act, 1934
Company specified in this behalf by the Central
Government after consultation with the RBI
Public Company having such net worth or
turnover as may be prescribed (Section 76)
Company may invite, accept or renew

deposits only from its members subject
to:
Passing a resolution at the General Meeting

Subject to such rules as may be prescribed
in consultation with the RBI
Subject to such terms and conditions,
including the provision of security, if any, or
for the repayment of such deposits with
interest, as may be agreed upon between
the Company and its Members
The fulfillment of the following

conditions ,namely:
Issuance of a circular to its members including
therein a statement showing:
the financial position of the company
the credit rating obtained
the total number of depositors
the amount due towards deposits in respect of
any previous deposits accepted by the
Company
and such other particulars as may be
prescribed
Filing a copy of the circular along with

such statement with the Concerned
Registrar within 30 days before the
date of issue of the circular;
Creation
of
Deposit
Reserve Account
Repayment
Deposit Repayment Reserve

Account
Creation of Deposit Repayment Reserve
Account and depositing such sum which
shall not be less than 15% of the amount of
its deposits maturing during a financial year
and the next following financial year
This amount shall not be used by the
company for any purpose other than
repayment of deposits.
Providing Deposit Insurance

certifying that the company has not committed any
default in
the repayment of deposits
payment of interest on such deposits
accepted either before or after the commencement of
this Act

Providing security, if any for the due

repayment of the amount of deposit or the
interest thereon
Provided that in case where a company does not
secure the deposits or secures such deposits
partially, then, the deposits shall be termed as
unsecured deposits and shall be so quoted in
every circular, form, advertisement or in any
document related to invitation or acceptance of
deposits.
Repayment
Deposit accepted by a Company shall
be repaid with interest in accordance
with the terms and conditions of the
agreement.

Failure in Repayment
the Depositor concerned may apply to
the Tribunal for an order directing the
company to:
pay the sum due or
any loss or
damage incurred by him as a result of
such non-payment and
for such other orders as the Tribunal
may deem fit.
Repayment of deposits, etc., accepted

before commencement of this Act.
(Section 74) (New Provision)
in respect of any deposit accepted by a company
before the commencement of this Act, the amount
of such deposit or part thereof or any interest due
thereon remains unpaid, the company shall
file, within a period of 3 months with the Registrar a

statement of all the deposits and sums remaining unpaid
on such amount with the interest payable thereon along
with the arrangements made for such repayment
repay within one year from such commencement or from

the date on which such payments are due, whichever is
earlier
Acceptance of deposits from public

by certain companies. (Section 76)
(corrosponding to section 58A)
Notwithstanding anything contained in

section 73, a Public Company, having such
net worth or turnover as may be
prescribed, may accept deposits from
persons other than its members subject to:
compliance with the requirements provided
section 73(2)
such rules as the Central Government may,
in consultation with the RBI
such a company shall be required to obtain

the rating from a recognized credit rating
agency
every company accepting secured deposits
from the public shall within 30 days of such
acceptance, create a charge on its assets of
an amount not less than the amount of
deposits accepted in favour of the deposit
holders
Draft Rules Under the

Companies Act, 2013
Definitions of:
Deposits:
Deposit includes any receipt of money by way of deposit
or loan or in any other form, by a company, but does not
include
any amount received from the Central Government or a State

Government or from a local authority or statutory authority
constituted under the Act of Parliament
any
amount
received
from
foreign
Governments,
foreign/international banks, foreign collaborators, foreign bodies
corporate and foreign citizens, foreign authorities or persons
resident outside India subject to provisions of FEMA
any amount received as a loan or facility from any banking
company

any amount received as a loan or financial assistance from

Public
Financial
Institutions,
Insurance
Companies,
Scheduled Banks and Mutual Funds registered with SEBI .
any amount received against issue of commercial paper
any amount received by a company from any other
company
any amount received and held towards subscription to any
securities, including share application money or advance
towards allotment of securities pending allotment
any amount received from a person who, at the time of the
receipt of the amount, was a director of the company
any amount received from an employee not exceeding his
annual salary
any non-interest bearing amount received or held in trust

any amount received in the course of, or for the purposes

of, the business of the company as an advance for the
supply of goods or advance, accounted for in any manner
whatsoever, received in connection with consideration for
property under an agreement or arrangement or as
security
deposit for the performance of the contract for supply of goods or
as advance received under long term projects
any amount brought in by the promoters of the company

by way of unsecured loan

Eligible Company as referred to in subsection (1) of section 76

It means a public co. having a:
net worth of not less than Rs. 100 crore
Or
turnover of not less than Rs. 500 crore
and which has obtained the prior consent of the
co. in general meeting by means of a special
resolution.
New Rules V/S Old Rules

Rules Under the
Companies Act,
2013
Furnishing of deposit
receipts to depositors.
Every Co. shall furnish a

deposit receipt for the
amount received by the
Co. within a period of 21
days from the date of
receipt of money
Companies
(Acceptance of
Deposits) Rules,
1975
Furnishing of deposit
receipts to depositors.

Every Co. shall furnish a

deposit receipt for the
amount received by the
Co. within a period of 8
weeks from the date of
receipt of money
Details to be included in
the Register Of Deposits
Details to be included in
the Register Of Deposits
Additional disclosures along with

earlier disclosures
PAN of the depositor/s;

Particulars of guardian, in case of
a minor;
Particulars of the nominee;
Deposit receipt number;
Due date(s) for payment of
interest;
Details of deposit insurance
including extent of deposit
insurance

Name and address of the

depositor;
Date and amount of each
deposit;
Duration of the deposit and the
date on which each deposit is
repayable;
Rate of interest;
Date or dates on which payment
of interest will be made;
Any other particulars relating to
the deposit.
Penalty
Penalty
If any Co. u/s 73 or any Eligible

Co. inviting deposits or any
other person contravenes any
provision of these Rules for
which
no
punishment
is
provided in the Act, the Co and
every officer of the Co who is in
default or such other person
shall be punishable with fine
which may extend to Rs. 5,000
and where the contravention is
a continuing one, with a further
fine which may extend to Rs.
500 for every day after the first
day
during
which
the
contravention continues.

If any Co. inviting deposits or any

other person contravenes any
provision of these Rules for which
no punishment is provided in the
Act, the Co and every officer of
the Co who is in default or such
other person shall be punishable
with fine which may extend to Rs.
500 and where the contravention
is a continuing one, with a further
fine which may extend to Rs. 50
for every day after the first day
during which the contravention
continues.


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ACCEPTANCE OF DEPOSITS

From:- B. K. Gupta & Associates, Company Secretaries

From:- B. K. Gupta & Associates, Company Secretaries

Prohibition on acceptance of deposits

From:- B. K. Gupta & Associates, Company Secretaries

Nothing contain in this sub-section

Company may invite, accept or renew

Passing a resolution at the General Meeting

The fulfillment of the following

Filing a copy of the circular along with

Deposit Repayment Reserve

Providing Deposit Insurance

From:- B. K. Gupta & Associates, Company Secretaries

Providing security, if any for the due

From:- B. K. Gupta & Associates, Company Secretaries

Repayment of deposits, etc., accepted

file, within a period of 3 months with the Registrar a

repay within one year from such commencement or from

Acceptance of deposits from public

Notwithstanding anything contained in

such a company shall be required to obtain

Draft Rules Under the

any amount received from the Central Government or a State

From:- B. K. Gupta & Associates, Company Secretaries

any amount received as a loan or financial assistance from

From:- B. K. Gupta & Associates, Company Secretaries

any amount received in the course of, or for the purposes

any amount brought in by the promoters of the company

From:- B. K. Gupta & Associates, Company Secretaries

Eligible Company as referred to in subsection (1) of section 76

New Rules V/S Old Rules

Every Co. shall furnish a

From:- B. K. Gupta & Associates, Company Secretaries

Every Co. shall furnish a

Additional disclosures along with

PAN of the depositor/s;

From:- B. K. Gupta & Associates, Company Secretaries

Name and address of the

If any Co. u/s 73 or any Eligible

From:- B. K. Gupta & Associates, Company Secretaries

If any Co. inviting deposits or any

From:- B. K. Gupta & Associates, Company Secretaries

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