Section 73 – 76 of Companies Act, 2013 r/w Rules as per Chapter V of Companies Act, 2013 governs the mechanism related to invitation and acceptance of deposits.
Section 2(31) of the Companies Act of 2013 defines ‘deposit’ to include any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India.[1]
Section 73 talks of accepting deposits from company’s members. Section 73(2) states that a company can after passing a resolution at a general meeting and after consulting with Reserve Bank of India and fulfilling certain Rules, may accept deposits from its members on such terms and conditions, having 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, subject to completion of certain requirements as specified u/s 73(2)(a) to (f).[2]
The Procedure is given below:
1. Companies desirous of inviting and accepting deposits from their members need to convene Board Meeting and there needs to deicide and approve such business and at the last regarding day, time and date of conducting general meeting.
2. Issuing such notice of general meeting to the members of the company.
3. Convene such general meeting in presence of requisite members and pass appropriate resolution for inviting deposits
4. Adhere with such Rules and Guidelines as have been specified and agreed upon after consulting RBI, and also of such Terms and Conditions as have been mutually agreed upon by deposit holders on one hand and the Company on the other hand, either for accepting or repaying deposits.
5. Issuing a circular to such members of the company which will comprise of a statement that will show the company’s financial position, the credit rating that it had obtained from respective national/accredited credit agency, the actual number of depositors and any such previous deposits that is required to be repaid to earlier depositors and any other matters, as deem fit. Such information signifies the reliability of the company or any prospective warning about any evaluated risks involved therein.
6. Such circular must be published in a leading English language newspaper and also in the vernacular language newspaper having a state-wide circulation in that state where the company’s Reg. Office is situated.
7. File ‘Form DPT-1’ concerning the above-mentioned particulars of such Circular along with any other required statement/ information with the Registrar within thirty days before the date of issue of circular.
8. Deposits may be termed as “unsecured deposits” if such company isn’t able to secure their deposits or such deposits have been secured partially, and accordingly they will be quoted and mentioned in the same manner in every circular, form, advertisement or in any document related to invitation or acceptance of deposits.
9. Such company needs to create a charge on its assets, if inviting for such deposits from its members as a security for repayment purpose, and also for repaying any subsequent interests along with it.
10. Such company is required to submit ‘Form CHG-1’ with Registrar for assets excluding intangible assets, and one important thing to keep there in mind is that secured deposits including interest should not exceed the market value of the charged assets after having assessed by the registered valuer.
11. Once 30 days get over since filing of Form DPT-1, the circular with requisite application is thereby dispatched to all the members through a registered post or speed post or through an e-mail.
12. Collect above signed application form with such money from members as per what is fixed in the meeting and provided in the circular.
13. Issuance of receipts of such collected deposits within 21 days of receiving money or cheque realisation.
14. Preserve a proper register of such deposits at company’s registered office that will thereby include details as given under Rule 14 Companies (Acceptance of Deposits) Rules, 2014 from the date of accepting such deposits.
15. Pay the interest as having been fixed in meeting and provided in the circular.
16. Creating a ‘Deposit Repayment Reserve Account’ wherein such sum not less than twenty percent of the amount of such collected deposits maturing in that financial year and the subsequent financial year will be deposited accordingly.
17. File ‘Form DPT-3’ on or before 3oth June every year and submit return of deposits having information upto 31st March of that year to Ministry of Corporate Affairs.
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[1] Section 2(31) of Companies Act, 2013.
[2] Section 73 of Companies Act, 2013.
Disclaimer:- The entire contents of this document have been prepared on the basis of relevant provisions and rules and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information.
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