Procedure for Acceptance of Deposits

Procedure-for-Acceptance-Deposits

As per the provisions of section 73(2) of the Companies Act 2013 a company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members subject to the fulfillment of specified conditions.

A public company having net worth of not less than Rs. 100 Crores or turnover of not less than Rs. 500 Crores may accept deposits, which has obtained the prior consent of the members in a general meeting by means of Special Resolution and also filed the special resolution with the Registrar of Companies before making any invitation to the public for acceptance of deposits.

Eligible company, which is accepting deposits within the limit specified under section 180(1)(c) may accept deposits by means of an Ordinary Resolution.

Limit specified under section 180(1)(c) :
Money to be borrowed, together with the money already borrowed by the company shall not  exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company‘s bankers in the ordinary course of business:

Procedure for Acceptance of Deposits
1.    Convene a meeting of board after giving not less than seven days notice in writing to every director at his address registered with the company. Such notice shall be sent by hand delivery or by the post or by electronic means. Provided that meeting may be called at a shorter notice to transact urgent business subject to condition that atleast one independent director, if any, shall be present at the meeting.[Section 173(3)]
2.     In the Board meeting approve the Draft DPT-1 (Circular) to be issued to the members of the company, appoint a Trustee and fix the time, date & venue of the general meeting.
3.      Call General Meeting and Pass required Resolution for acceptance of deposit
4.      File form MGT-14 with ROC within 30 days of passing of resolution:

5.     Register the circular with the registrar of companies at least thirty days before the issue of circular.
6.   The company should enter into the contract for deposit insurance at least thirty days before the issuance of circular.
7.  The company should also appoint deposit trustees for creating security on deposits before issuance of the circular in case company issues secured deposits.
8.  The company shall execute a deposit trust deed in Form DPT-2 at least 7 days before issuance of deposits.
9.  Eligible company inviting secured deposits shall provide for security by way of a charge on its assets for the due repayment of the amount of deposit & interest thereon. The company shall submit Form CHG-1 with Registrar within 30 days from creation of charge for assets other than intangible assets & for an amount which shall not be less than the amount remaining unsecured by the deposit insurance. Secured deposits including interest thereon can in no case exceed the market value of the charged assets assessed by the registered valuer.
10. The circular for accepting deposits should be issued to the public. Such a circular may be issued by registered post acknowledgement due or by speed post or by electronic mode or publish in the form of advertisement in FORM DPT-1. It shall be issued under the authority and in the name of board of directors. Every company inviting deposits from the public shall also upload a copy of the circular on its website, if any.
11. After the acceptance of deposits The Company shall furnish to the depositor or his agent deposit receipt for the amount received by the company within 21 days from the realization of cheques.
12.Deposit such sum which shall not be less than fifteen percent of the amounts maturing during the year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposits repayment reserve. Such reserve shall not be used by company for any other purpose.
13. Every company accepting the deposits shall maintain a register of deposit containing the particulars as prescribed under Companies.
14. Every company shall on or before 30th day of June file with registrar a return in DPT-3 along with the fees and furnish the information as on 31st march duly audited by the auditor who shall give his report as per form. A copy of return shall be filed with Reserve Bank of India also.
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