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DG’s MINI BITES JAI MATA DI

REVISION NOTES (DG’s MINI BITES)

DEPOSITS
Chapter V Acceptance of Deposits by Companies Section 73
to 76A
The Companies (Acceptance of Deposits) Rules, 2014]

Form Series - DPT

 What is Deposit and What is NOT deposit?

As per Sec 2(31) read with Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, deposits
is defined as follows:

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 CG/SG, or any amount received from any other source whose
repayment is guaranteed by the CG/SG, 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
ii. any amount received from foreign govt., foreign bank, foreign body corporate, foreign citizen etc.
pursuant to the provisions of FEMA, 1999
iii. any amount received as a loan or facility from any banking company or from the State Bank of India
or any of its subsidiary banks or from a banking institution notified by the Central Government
under section 51 of the Banking Regulation Act, 1949…etc
iv. 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 RBI
v. any amount received against issue of commercial paper or any other instruments issued in
accordance with the guidelines or notification issued by the RBI
vi. any amount received by a company from any other company (Inter corporate - governed by Sec 186,
185 as the case may be)
vii. any amount received by a Company pursuant to offer of securities (through Private
Placement/Preferential Allotment/Rights Issue etc) as the subscription money or share application
money or advance towards allotment of the securities applied for
However, if the securities (for which aforesaid money is received by the Company) cannot be allotted
with 60 days from the receipt of money and such money is not refunded to the subscriber within next
15 days the completion of 60 days (means after 75 days of receipt of money and pending allotment),
then such amount SHALL be treated as Deposits
viii. any amount received from a person who, at the time of the receipt of the amount, was a director of
the company or a relative of the director of the Private company

DIRECTOR RELATIVE OF THE DIRECTOR

Public Company Private Company Public Company Private Company
Not treated as deposit Not treated as deposit Treated as deposit Not treated as deposit

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2 Conditions to be fulfilled in order to exclude above money from deposits:

By Director of the Company / Relative of the the company shall disclose the details of
director of a Private Company at the time of money so accepted in the Board's report
giving money: furnishes a declaration in AND
writing to the effect that the amount is given
from the owned funds and not borrowed
from any source

If any of the above condition is not fulfilled, then amount received shall be treated as deposit

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. The amount of such bonds or debentures shall not exceed the market value
of such assets as assessed by a registered valuer
or
 bonds or debentures compulsorily convertible into shares of the company within 10 years

ixa. UNSECURED NCDs Listed on the recognised stock exchange

x. 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
xi. any non-interest bearing amount received and held in trust
xii. any amount received in the normal course of business of the Company:
 as an advance from the customers against the supply of goods or services and such amount shall
be appropriated against such goods/services within 365 days from the date of acceptance. In
case of any legal proceedings in any court of law, then time period of 365 days shall not apply
 as an advance in connection with consideration for an immoveable property
 as security deposit for the performance of the contract for supply of goods or provision of
services
 as advance received under long term projects for supply of capital goods
 advance for providing future services (period should not be more than period as per common
business practice or 5 yrs whichever is less)
 advance received/allowed by any sectoral regulator under the instructions of CG/SG
 advance towards publications (print/electronic)
[Explanation – In pt no xii above, the amount shall be deemed to be deposits on the expiry of 15 days from the
date they become due for refund.]
xiii. any amount brought in 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:
 loan is infused pursuant to stipulation by the FI / Bank
 loan is provided by promoter or his relative or both
 the loan is NOT treated as deposit till the loans by FI/Bank subsist
xiv. any amount accepted by a Nidhi company in accordance with the rules made under section 406 of the
Act

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DEPOSITS MAY BE ACCEPTED:

From Own Members From Public and Own

Sec 73 Members .. Sec 76

Both Private and Public

Companies
Only Eligible Company:
PUBLIC COMPANY having:

Max. limit of deposits to be accepted:- Net worth of > Rs. 100 cr

Or
Non Eligible Public Companies Eligible public Companies (Sec 76)
From Members From From Members From Public
Turnover of > Rs. 500 cr
Public
Upto 35% of aggregate of the Prohibited Upto 10% of Upto 25% of aggregate
paid up share capital, free aggregate of the of the paid up share And
reserves and securities paid up share capital, free reserves
premium account capital, free and securities premium Prior consent of SHs through SR
reserves and account
+
securities premium
account Filing of MGT 14 with the ROC
before making invitation to the
PUBLIC before accepting
deposits
• Deposits may be held in joint names not exceeding three.
(If deposits accepted with in the
limits approved by SHs u/s
180(1)(c), then pass OR )

Non applicability of Chapter V:

The provisions of Chapter V (Sec 73 to 76A) are not applicable to the following companies:

1. Banking company
2. NBFC
3. Such other company as specified by CG in consultation with RBI

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S. No. Aspect Deposits from member u/s 73

Deposits from Public (including
member) u/s 76 by Eligible Companies
1 Applicability Both Public Company and Private Only Eligible Company – Public Company
Company having Net Worth of Rs. 100 cr or more
or turnover of Rs. 500 crore or more
2 Deposits accepted Only members Public (including members)
from:
3 Approvals required BR + Ordinary resolution BR + Special resolution (if, within limits
of Sec 180(1)(c) then, Ordinary
resolution
4 Max. Limits of From Members – From Members –
accepting deposits Non Eligible Public Company - Upto 10% of aggregate of the paid up
Upto 35% of aggregate of the paid share capital, free reserves and
(existing + proposed) up share capital, free reserves and securities premium account
securities premium account
From Public –
IFSC Public Company/Private Upto 25% of aggregate of the paid up
Company – up to 100% allowed share capital, free reserves and
securities premium account
No Limits for certain companies to accept
deposits from its members –
Govt Company from Public – 35%
a) Private Company – Start up – for 10
yrs. from incorporation.
b) Private Company – which is not an
associate or subsi, borrowings are
less than (2 times of PUC, or, 50 cr.,
whichever is less) and not defaulted
in the repayment of borrowings.

From Public –
Absolute Prohibition.
5 Form to be filed with Form DPT 3
the ROC
6 Min. and Max. Period Min. – 6 months ….. Max. – 36 months
of Deposits from the For meeting any short term requirements of funds, less than 6 months
date of allowed on the following 2 conditions:
acceptance/renewal a) such deposits shall not exceed 10% of the aggregate of the Paid-up share capital,
free Reserves and securities premium account of the company, and
b) such deposits are repayable not earlier than three months from the date of such
deposits or renewal thereof.

7 Rate of Interest Rate of Interest shall not exceed the maximum rate of interest or brokerage
prescribed by the RBI for acceptance of deposits by NBFC
8 Alteration of terms The company shall not 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 after circulating the same to the depositor and
accepted.
9 Credit Rating Credit rating to be obtained as per At the time of inviting deposits and at
Sec 73(2)(a) least once a year obtain credit rating for
deposits accepted by it and a copy of the
rating shall be sent to the ROC alongwith
the return of deposits in Form DPT-3.

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Credit rating shall not be below the

minimum investment grade rating
10 Process a) Issue circular + financial position+ a) Issue circular in Form DPT 1 in 2
credit rating + total no. of depositors newspapers (English + vernacular)
+ amt due towards any existing b) Upload circular on the website of the
Clause a) to e) not deposits accepted in Form DPT 1 + Company
applicable to a private attach certificate of stat auditors+ c) Circular issued under the authority of
company – 5th June, newspaper publication. Circular BODs
2015 notification issued on the authority of and in the d) 30 days before issue of circular to the
name of BODs members, file the same with the ROC
b) 30 days before issue of circular to the e) Validity of circular – 6 months from
members, file the same with the ROC closure or FY or next AGM, whichever
c) Validity of circular – 6 months from is earlier
closure or FY or next AGM, f) Deposit repayment reserve Account –
whichever is earlier 20% of deposits maturing should be
d) Deposit repayment reserve Account deposited on or before 30th April
– 20% of deposits maturing should COVID IMPACT – The above date has been relaxed
be deposited on or before 30th April to 30th June 2020.
COVID IMPACT – The above date has been g) Statutory auditor certification on no
relaxed to 30th June 2020 defaults on the existing deposits, if any
e) Statutory auditor certification on no h) Security creation.
defaults on the existing deposits, if i) Repayment – As per the terms and
any. conditions mentioned in the circular.
f) Security creation.
g) Repayment – As per the terms and
conditions mentioned in the circular.
11 Default in repayment Depositor may apply to NCLT Depositor may apply to NCLT
12 Creation of security The companies shall provide for security by way of a charge on its assets for
the due repayment of the amount of deposit and interest thereon.

The amount of such deposits and the interest payable thereon shall not
exceed the market value of such assets as assessed by a registered valuer.
Security shall be created in the favour of Depositor trustee.

13 Trustee for depositors a) Appointment of one or more trustee for depositors for creating security
for the deposits.
b) Written consent to be obtained from the Depositor’s trustee.
c) Deposit trust deed executed in Form DPT 2 between the Company and
trustee
d) Disqualifications of a depositor’s trustee mentioned in Rule 7.
e) RULE 7(4) – Unanimous Board resolution – Removal of the depositor’s
trustee.
f) Duties of depositor trustee mentioned in Rule 8.

14 Meeting of depositors Trustee to call meeting of the depositors on the requisition of the depositors
or on the happening of any event, which will affect the interest of the
depositors.
15 Furnishing deposit Company to furnish deposit receipts to the depositor within 21 days from the
receipts to the receipt of money.
depositors Receipt shall be signed by the officer of the company authorised by the BODs.
16 Register of Deposits Company to maintain Register of Deposits.
17 Premature Repayment After 6 months but before expiry – ROI to be reduced by 1% from …..
15 Return of Deposits Form DPT 3 – Furnish information as on 31st march - on or before 30th June
every year.
Form DPT-3 shall be used for filing return of deposit or particulars of
transaction not considered as deposit or both by every company.

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16 Disclosure in Financial Every Company shall disclose in its financial statements the money received
Statement from the director and private company to also disclose money received from
a relative of a director.
17 Penal rate of interest @18% p.a. for the overdue period in case of deposits, whether secured or
unsecured, matured and claimed but remaining unpaid.

 Intending depositor to provide a declaration attached to the application form, that the deposit
is not being made out of any money borrowed by him from any other person.
 Every depositor may, at any time, nominate any person to whom his deposits shall vest in the
event of his death

 Sec. 76A - Penalty for contravening any provision Sec 73 and 76 –

Company - in addition to the re-payment of the amount of deposit or part thereof and the
interest due, be punishable with fine which shall not be less than 1 crore rupees or twice the
amount of deposit accepted by the company, whichever is lower but which may extend to
10 crore rupees;

And

Every officer of the company who is in default - shall be punishable with imprisonment
which may extend to 7 years and with fine which shall not be less than 25 lakh rupees but
which may extend to 2 crore rupees.

Moreover if officer in default has is proved to have intention to DECEIVE then he is liable
u/s 447.

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DG Sir, is a God Gifted person with ocean of knowledge. DG is master blaster in the world of Corporate Laws. He is my
I never studied so much indepth in my life before joining “Marg Darshak”, and I wish to give him Guru Dakshina with
his classes. - Mohd. Arshad my good marks. - Abhishek Khandelwal
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ACL
: 80 Taare Zameen Par
: 85 : 80
ACL ECL
r Singh
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Nu

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CL : 79 CL : 74 CL : 74 C L : 72 IL/GL
: 92

na Tanw
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S

ECL
: 76
ECL
: 73 SL : 79 SL : 74 SL : 73 DD : 7
6

hor Aror
ib
V

SL : 72 SL : 71 SL : 70 SL : 70 IL/GL
: 87 CR : 71 SL : 72

SL : 80 : 77 : 76 :8
IL/GL IL/GL ECL
: 74 IL/GL 1 DD : 81

ka Rana
an
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P ri

0
DD : 7
2 DD : 7 CR : 7
0
ACL
: 73 ACL
: 70
ACL
: 70
CR : 77

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