TMI BlogChapter V - The Companies (Acceptance of Deposits) Rules, 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... These rules shall apply to a company other than - (i) a banking company; (ii) a non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) registered with the Reserve Bank of India; (iii) a housing finance company registered with the National Housing Bank established under the National Housing Bank Act, 1987 (53 of 1987); and (iv) a company specified by the Central Government under the proviso to sub-section (1) of section 73 of the Act . 2. Definitions.- (1) In these rules, unless the context otherwise requires, ___ (a) Act means the Companies Act, 2013 (18 of 2013) ; (b) Annexure means the Annexure attached to these rules; (c) deposit includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include - (i) any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government, or any amount received from a local authority, or any amount received from a statutory authority constituted under an Act of Parliament or a State Legislature ; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility or action, if the securities for which application money or advance for such securities was received cannot be allotted within sixty days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules. (b) any adjustment of the amount for any other purpose shall not be treated as refund. (viii) any amount received from a person who, at the time of the receipt of the amount, was a director of the company: Provided that the director from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others; (ix) any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds or debentures compulsorily convertible into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng financial institution or a bank subject to fulfillment of the following conditions, namely:- (a) the loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance; (b) the loan is provided by the promoters themselves or by their relatives or by both; and (c) the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter; (xiv) any amount accepted by a Nidhi company in accordance with the rules made under section 406 of the Act . Explanation.- For the purposes of this clause, any amount.- (a) received by the company, whether in the form of instalments or otherwise, from a person with promise or offer to give returns, in cash or in kind, on completion of the period specified in the promise or offer, or earlier, accounted for in any manner whatsoever, or (b) any additional contributions, over and above the amount under item (a) above, made by the company as part of such promise or offer, shall be treated as a deposit; (d) depositor means,- (i) any member of the company who has made a deposit with the company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eserves of the company, and (b) such deposits are repayable not earlier than three months from the date of such deposits or renewal thereof. (2) Where depositors so desire, deposits may be accepted in joint names not exceeding three, with or without any of the clauses, namely, Jointly , Either or Survivor , First named or Survivor , Anyone or Survivor . (3) No company referred to in sub-section (2) of section 73 shall accept or renew any deposit from its members, if the amount of such deposits together with the amount of other deposits outstanding as on the date of acceptance or renewal of such deposits exceeds twenty five per cent. of the aggregate of the paid-up share capital and free reserves of the company. (4) No eligible company shall accept or renew- (a) any deposit from its members, if the amount of such deposit together with the amount of deposits outstanding as on the date of acceptance or renewal of such deposits from members exceeds ten per cent. of the aggregate of the paid-up share capital and free reserves of the company; (b) any other deposit, if the amount of such deposit together with the amount of such other deposits, other than the deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh language in an English newspaper and in vernacular language in one vernacular newspaper having wide circulation in the State in which the registered office of the company is situated. (3) Every company inviting deposits from the public shall upload a copy of the circular on its website, if any. (4) No company shall issue or allow any other person to issue or cause to be issued on its behalf, any circular or a circular in the form of advertisement inviting deposits, unless such circular or circular in the form of advertisement is issued on the authority and in the name of the Board of directors of the company. (5) No circular or a circular in the form of advertisement shall be issued by or on behalf of a company unless, not less than thirty days before the date of such issue, there has been delivered to the Registrar for registration a copy thereof signed by a majority of the directors of the company as constituted at the time the Board approved the circular or circular in the form of advertisement, or their agents, duly authorised by them in writing. (6) A circular or circular in the form of advertisement issued shall be valid until the expiry of six months from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany in complying with the terms and conditions of the deposit insurance contract which makes the insurance cover ineffective, the company shall either rectify the default immediately or enter into a fresh contract within thirty days and in case of non-compliance, the amount of deposits covered under the deposit insurance contract and interest payable thereon shall be repaid within the next fifteen days and if such a company does not repay the amount of deposits within said fifteen days it shall pay fifteen per cent. interest per annum for the period of delay and shall be treated as having defaulted and shall be liable to be punished in accordance with the provisions of the Act. 6. Creation of security.- (1) For the purposes of providing security, every company referred to in sub-section (2) of section 73 and every eligible company inviting secured deposits shall provide for security by way of a charge on its assets as referred to in Schedule III of the Act excluding intangible assets of the company for the due repayment of the amount of deposit and interest thereon for an amount which shall not be less than the amount remaining unsecured by the deposit insurance: Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the depositors, if the proposed trustee - (a) is a director, key managerial personnel or any other officer or an employee of the company or of its holding, subsidiary or associate company or a depositor in the company; (b) is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company; (c) has any material pecuniary relationship with the company; (d) has entered into any guarantee arrangement in respect of principal debts secured by the deposits or interest thereon; (e) is related to any person specified in clause (a) above. (4) No trustee for depositors shall be removed from office after the issue of circular or advertisement and before the expiry of his term except with the consent of all the directors present at a meeting of the board. Provided that in case the company is required to have independent directors, at least one independent director shall be present in such meeting of the Board 8. Duties of trustees.- It shall be the duty of every trustee for depositors to- (a) ensure that the assets of the company on which charge is created together with the amount of deposit insurance are suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or or his agent a receipt for the amount received by the company, within a period of twenty one days from the date of receipt of money or realisation of cheque or date of renewal. (2) The receipt referred to in sub-rule (1) shall be signed by an officer of the company duly authorised by the Board in this behalf and shall state the date of deposit, the name and address of the depositor, the amount received by the company as deposit, the rate of interest payable thereon and the date on which the deposit is repayable. 13. Maintenance of liquid assets and creation of deposit repayment reserve account.- Every company referred to in sub-section (2) of section 73 and every eligible company shall on or before the 30th day of April of each year deposit the sum as specified in clause (c) of the said sub-section with any scheduled bank and the amount so deposited shall not be utilised for any purpose other than for the repayment of deposits: Provided that the amount remaining deposited shall not at any time fall below fifteen per cent. of the amount of deposits maturing, until the end of the current financial year and the next financial year. 14. Registers of deposits.- (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the naval, military or air forces or to their families, on an application made by the associations or societies formed by such personnel, during the period of emergency declared under article 352 of the Constitution : Provided further that where a company referred to in under sub-section (2) of section 73 or any eligible company permits a depositor to renew his deposit, before the expiry of the period for which such deposit was accepted by the company, for availing of a higher rate of interest, the company shall pay interest to such depositor at the higher rate if such deposit is renewed in accordance with the other provisions of these rules and for a period longer than the unexpired period of the deposit. Explanation: For the purposes of this rule, where the period for which the deposit had run contains any part of a year, then, if such part is less than six months, it shall be excluded and if such part is six months or more, it shall be reckoned as one year. 16. Return of deposits to be filed with the Registrar.- Every company to which these rules apply, shall on or before the 30th day of June, of every year, file with the Registrar, a return in Form DPT-3 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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