Deposit Under Companies Act, 2013

Deposits means when a company are generally acquiring funds from the members or the public in the form of loan or any other form as may be prescribed, but does not include certain classes of transactions. Companies aim to secure finance by different cost-effective methods to suit their financial requirements. The legal definition of deposit are provided under Section 2 (31) of Companies Act and Rule 2(1)(v) Definition Of Deposit.

Applicable provisions: Sections 73 to 76 of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rule, 2014.

Applicability: Company can accept deposits from members and public after complying, the provisions, which are mentioned under this Chapter i.e. “Acceptance of Deposits by Companies” However, following companies does not cover under the chapter:

1. Banking Company

2. Non Banking Financial Companies as per the RBI Act 1934

3. Any other company notified by the Central Government in consultation with the RBI.

What is Eligible Company: Eligible Company, means a Public Company having Net Worth of not less than 100Cr or more or a Turnover of not less than 500Cr or more and which has obtained the prior consent of the company in general meeting by means of a Special Resolution and also filed the said resolution with the Registrar of Companies and where applicable, with the Reserve Bank of India before making any invitation to the Public for acceptance of Deposits;

Provided that an eligible company, which is accepting deposits within the limits specified under section 180(1)(c) may accept deposits by means of an ordinary resolution.

Time period : No company shall accept or renew any deposit, whether secured or unsecured, which is repayable on demand or upon receiving a notice within a period of less than 6 months or more than 36 months from the date of acceptance or renewal of such deposit:

Provided that a company can accept, renew such deposit for repayment earlier than 6 months subject to the conditions that:

Such deposit, shall not exceed 10% of the aggregate of [Paid-up share capital, free Reserves and securities premium account] of the company,
Such deposits are not repayable earlier than 3 months from the date of acceptance or renewal.

MAXIMUM AMOUNT OF DEPOSIT AVAIL”

Private company which is a start-up,
Private company which is not an associate or a subsidiary company of any other company
Borrowings of such a company from banks or financial institutions or anybody corporate is less than twice of its paid up share capital or 50Cr rupees, whichever is less ; and
such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73:

THE PROCEDURE TO ACCEPT DEPOSITS:-

STEPS	PARTICULARS
1	Convening Board Meeting for the purpose of :

1. Consider and approve the business to propose and accept deposits from members

2. Fixing the date, time and Venue of Extra Ordinary General Meeting

Financial position of the company,
Credit rating obtained,
Total number of depositors
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;

Deposit Repayment Reserve: Deposit such sum which shall not be less than 20% of the amount of its deposits maturing during the financial year and the financial year next following and keeping it in a separate bank account called deposit repayment reserve account. The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.

Deposit Under Companies Act, 2013

Return of Deposit: Submit return of deposits in Form DPT-3 on or before 30th June each year for information as on 31st March of respective year.

Forms required in Deposit:

DPT1	Circular or circular in the form of advertisement inviting deposits
DPT 2	Deposit Trust deed
DPT 3	Return of deposits
DPT 4	Statement regarding deposits existing on the commencement of the Act

Penal Provisions:

Company	Rs. 1 Cr or Twice the amount of deposit (Whichever is lower) but which may extend to Rs. 10 Crore rupees
Officer in default	Imprisonment: 7 years and Fine: Rs. 25 Lakhs which may extend to Rs. 2 Crore
Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or willfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.

Disclaimer: –The above mentioned article has been based on relevant provisions of Companies Act, 2013. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.