Companies Acceptance of Deposit Rules 2014.

Companies Acceptance of Deposit Rules 2014.

				By: namrata gupta
				April 4, 2014
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Contents

Chapter V

Companies Acceptance of Deposit (Section 73 to Section 76 of the companies Act 2013)

The Companies Acceptance of Deposit rules are not applicable to :

A Banking Company,
A Non Banking Finance Company registered with RBI,
A Housing Finance Company registered with National Housing Bank,
Any other Company which the Central Government may specify.

Deposit :

Deposit includes any receipt of money by way of deposit or loan or in any other form, by a Company.

Following amount received shall not be considered Deposits under this Chapter

Any amount received from Central Government /State Government/ local authority/statutory authority constituted under an Act of Parliament or State legislature /any other source whose repayment is guaranteed by Central Government or State Government.
Any amount received from Foreign or international banks / multilateral financial institutions/Foreign Government owned development financial institutions / foreign export credit agencies / foreign collaborators/ foreign body corporate /foreign citizens / foreign authorities / persons resident outside India subject to the provisions of Foreign Exchange Management Act,1999.
Any amount received as a loan from a Banking Institution including co-operative banks notified under Banking Regulation Act.
Any amount received as a loan from Public Financial Institution /Regional Financial Institutions / Insurance Companies / Scheduled Banks.
Any amount received against commercial paper or any other instruments issued in accordance with the guidelines of Reserve Bank of India.
Any amount received from any other Company.
Any amount received against subscription to any securities including share application money provided the securities are allotted within 60 days from the date of receipt of the application money or advance.

If the securities are not allotted within 60 days then the same should be refunded within 15 days else the same shall be treated as deposit after completion of 15 days.

Any amount received from a person who at the time of receipt was a director provided the director furnishes a declaration that the amount given is not out of borrowed funds.
Any amount raised by issue of bonds or debentures secured by first charge on any assets referred to in Schedule III of the Act excluding intangible assets.
Any amount received from an employee of the company not exceeding his annual salary in the nature of non interest bearing security.
Any amount received as a Non- interest bearing amount received or held in trust.
Any amount received in the course of or the purpose of the business for the following :-
1. As advance for the supply of goods or provision of services provided such advance is appropriated against supply of goods or provision of service within 365 days from the receipt of such amount,
2. As advance received in connection with consideration for property under an agreement or arrangement,
3. As security deposit for the performance of the contract for supply of goods or provision of services.
4. As advance received under long term projects for supply of capital goods.

If any amount received under clause (a),(b) and (d) becomes refundable due to the reasons that the company accepting money does not have necessary permission or approval to deal with the goods or services then the amount received shall be deemed to be a deposit after the expiry of 15 days from the date they become due for refund.

Any amount brought in by the promoters themselves or their relatives by way of unsecured loan in pursuance of a stipulation of any lending institution on the promoters. Such exemption shall be available only till the loans of the Financial Institutions are not repaid and not thereafter.
Any amount accepted by a Nidhi Company in accordance with rules made u/s 406 of the Act.

Section 76 Eligible Company

Eligible Company means:-

A public Company and it has either of the following
Net worth of not less than one hundred crore rupees or turnover of not less than five hundred crore rupees.
It has obtained the prior consent of the company in general meeting by means of a special resolution
It has filed the above resolution with the Registrar of Companies before making any invitation to the Public for accepting deposits.

Exception: An eligible company may accept deposits my means of a ordinary resolution if it is accepting deposits within the limit specified under clause (c) of sub section (1) of section 180.

Conditions for acceptance of Deposit

No Company shall accept or renew deposit whether, secured or unsecured, which is repayable on demand or upon receiving a notice within a period of less than 6 months or more than 36 months from the date of acceptance or renewal of such deposit.

Exception : A company may for the purpose of meeting its short term requirements of funds accept or renew deposits whose repayment is before six months provided they do not exceed 10 percent of the aggregate of the paid up share capital and free reserves of the company and they are not repayable before 3 months from the date of deposits.

Deposits may be accepted in Joint names not exceeding 3.
A non Eligible company Shall accept deposit only to the extent of 25 percent of the aggregate of paid up share capital and free reserves.
A Eligible companies 1) Deposit from members shall not exceed 10 percent of the aggregate of paid up share capital and free reserves. 2) Deposit from others shall not exceed 25 percent of the aggregate of paid up share capital and free reserves (excluding deposit from members)
A Government companies shall not accept deposit more than 35 percent of the aggregate of paid up share capital and free reserves.
Interest or Brokerage paid should not exceed the maximum rate of interest or brokerages prescribed by the RBI for acceptance of deposits by Non Banking Finance Companies.
The Company shall not reserve to itself whether directly or indirectly a right to alter, to the prejudice or disadvantage of the depositor, any of the terms and conditions of the deposit, deposit trust deed and deposit insurance contract.

Validity of Circular

The circular shall be valid until the expiry of six months from the date of closure of the financial year in which it is issued or until the date on which the financial statement is laid before the company in annual general meeting. For the purpose of this rule the date of the issue of the newspaper in which the advertisement appears shall be taken as the date of the issue of the newspaper and for the issue of circular effective date shall be the date of dispatch of circular.

Conditions for inviting deposits from members and public

Transitory Provision

Where 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 on such commencement or becomes due at any time thereafter, the company shall -

File with the Registrar a statement in form DPT-4 a statement of all deposits accepted by the company and sums remaining unpaid along with the interest payable thereon along with the arrangements made for such repayments.
Repay within one year from such commencement or from the date on which such payments are due whichever is earlier.

By: namrata gupta - April 4, 2014