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Chronicle of Added Capital-Deposit

Corporate Laws / Banking / SEBI / LLP - By: - sachin bhola - Dated:- 21-1-2016 - In ordinary parlance a Deposit is money placed with some other entity to be used for some specific purpose at a later point of time. Companies used to borrow money to liquidate their short term as well as long term financial needs. The companies Act, 2013 authorizes company for accept deposits from its member or from public but subject to fulfillment of certain conditions as laid down. The Companies Act, 2013 ( ACT .....

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n both the definition is that the definition provided in the rules is specifically enumerating the instances of exclusion from the definition of deposit. Following are the exclusions: Any amount received from central government or state government or any local authority or statutory authority. This category also includes amount guaranteed to be repaid by such government or authority; Any amount received from any foreign entity. This sub-rule specifically including International Financial Corpora .....

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resident outside India who is subject to the provisions of FEMA, 1999. Any amount received as a loan from any bank in India; Any amount received as a loan from Public Financial Institution; Amount received from issue of commercial paper; Amount received from other company; Amount received pursuant to issue of shares but it shall be deemed to be a deposit where advance is made and securities is not issued in a period of 60 days or refund is not effected in a period of 15 days.; Amount received by .....

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ic. On face of it, it is restricting right of inviting and accepting deposits from public. But, in later part of sub-section it is permitting subject to satisfaction of conditions as prescribed in Sub-section (2) of Section 73 of the act. A private company can accept deposits from public as well as from its member and there is no eligibility apart from the conditions as laid down under Sub-section (2) of Section 73. Whereas if public companies wants to invite and accept deposit from public, it m .....

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to fulfillment of following conditions: Passing of Ordinary resolution in General Meeting; Issuance of Circular:- following are the procedure and content of such circular: Must be sent to every member of the company; Must be sent through Registered post or speed post or by e-mail; Sent to registrar in form DPT-3; Must be supported by an advertisement in an English newspaper and vernacular newspaper; Financial Position of the company; Credit rating from recognized credit rating agency; Total numb .....

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citly declares that only prescribed company is allowed to accept deposits from the person other than its member. But such companies are obliged to such rules as laid down by Reserve Bank of India in addition to the conditions as provided in Section 73 (2). Rule 2 (d) defines the term Eligible Company to mean a public company as referred in Section 76(1), having the following: Net worth should not be less than 100 crore; Turnover should not be less than 500 crore. Who Cannot Accept Deposits? Sect .....

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