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ACCEPTANCE OF DEPOSITS BY COMPANIES UNDER COMPANIES ACT 2013 PART I

Corporate Laws / Banking / SEBI / LLP - By: - Mr.M. GOVINDARAJAN - Dated:- 22-6-2015 - Chapter V of the Act deals with the acceptance of deposits by companies. For that purpose the Central Government, in consultation with Reserve Bank of India, makes the rule namely The Companies (Acceptance of Deposits) Rule, 2014. This rule came into effect from 01.04.2014 Non applicability The provisions relating to acceptance of deposits as in the Act and the rules made there under shall not applicable to t .....

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2(1)(e) defines the term eligible company as a public company as referred to in Section 76(1) having a net worth of not less ₹ 100 crores or a turnover of not less than ₹ 500 crores and which has obtained the prior consent of the company in general meeting by means of a special resolution with the Registrar of Companies before making any invitation to the Public for acceptance of deposits. Section 76(1) provides that notwithstanding anything contained in Section 73, a public company, .....

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ic which ensures adequate safety and the rating shall be obtained for every year during the tenure or deposits. The 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 favor of the deposit holders in accordance with such rules as may be prescribed. Definition of deposit Rule 2(c) defines the term deposit as including any receipt of money by way of deposit or loan or .....

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ks; Multilateral financial institutions, including but not limited to International Financial Corporation, Asian Development Bank, Common wealth Development Corporation and International Bank for Industrial and Financial Reconstruction; Foreign Governments owned development financial institutions; Foreign export credit agencies; Foreign collaborators; Foreign corporate bodies and foreign citizens; Foreign authorities or persons resident outside India subject to the provisions of Foreign Ex .....

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king (Acquisition and Transfer of Undertaking) Act, 1980; or A co-operative bank as defined in Clause (b-ii) of Section 2 of the Reserve Bank of India Act, 1934. Any amount received as a loan or financial assistance from Public Financial Institutions notified by the Central Government in this behalf in consultation with the Reserve Bank of India or any regional financial institutions or Insurance companies or scheduled banks as defined in the Reserve Bank of India Act; Any amount received aga .....

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e amount due on allotment of the securities applied for. For this purpose it is clarified by the Central Government that- Without prejudice to any other liability or section, if the securities for which application money or advance for such securities was received cannot be allotted within 60 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 15 days from the date of completion of .....

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ncial year ending on or before 31.03.2014 against which the allotment is pending on 31.03.2015, the company shall, by 01.06.2015 either return such amounts to the persons from whom these were received or allot shares, stock, bonds or debentures or comply with these rules; Any adjustment of the amount for any other purpose shall not be treated as refund. Any amount received from a person who, at the time of receipt of th amount, was a director of the company. The director from whom money is rec .....

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le into shares of the company within five years. If such bonds or debentures are secured by the charge of any assets referred to in Schedule III of the Act, excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer. Any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non interest bearing security deposit; .....

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ourt of law, the said time limit of these 365 days shall not apply; an advance accounted for in any manner whatsoever, received in connection with consideration for an immoveable property under an agreement or arrangement, provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement; as security deposit for the performance of the contract for supply of goods or provision fo services; as advance received from long term projects for suppl .....

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d to in the proviso shall be deemed to be deposits on the expiry of 15 days from the date they become due for refund. Any amount brought by the promoters of the company by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a bank subject to fulfillment of the following conditions namely: The loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance; The loan is provided by the prom .....

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period specified in the promise or offer, or earlier, accounted for in any matter whatsoever; or Any additional contributions, over and above the amount under above made by the company as part of such promise or offer shall be treated as a deposit. Conditions prescribed for accepting deposits Section 73(2) provides that the company may, subject to= the passing of resolution in general meeting; and such rules as may be prescribed by the Central Government in consultation with the Reserve Bank .....

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the amount due towards deposits in respect of any previous deposits accepted by the company; and such other particulars in such form and in such manner as may be prescribed; filing a copy of the circular along with such statement with the Registrar within 30 days before the date of issue of the circular; depositing such sum which shall not be less than 15% of the amount of the deposit maturing during a financial year and the financial year next following and kept in a scheduled bank in a sep .....

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property or assets of the company. 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. Rule 3 provides for the terms and conditions for acceptance of deposits by the companies. The said Rule provides that with effect from 01.04.2014, no company under Section 73(2) and no eli .....

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re capital and free reserves of the company; any other deposit, if the amount of such deposit together with the amount of such other deposit, if the amount referred to in the above clause, outstanding on the date of acceptance or renewal exceeds 25% of aggregate or the paid up share capital and free reserves of the company; invite or accept or renew any deposit in any form, carrying a rate of interest or pay brokerage thereon at a rate exceeding the maximum rate of interest or brokerage prescr .....

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eposits 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 ; A company may, for the purpose of meeting any of its short term requirements of funds, accept or renew such deposits for repayment earlier than 6 months from the date of such deposit or renewal as the case may be subject to the condition that- Such deposits shall not exceed 10% of the aggregate of the paid up share c .....

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