Deposit under new CA Act

Detailed provisions of deposit

Existing Deposits: Where the deposit accepted by the company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall:

1. A return is to be filed within 90 days for all deposit accepted.

2. Repay within 1 year from commencement of this act or from the date on which such payment are due, which ever is earlier.

To accept or renew deposits the Companies need to obtain prior consent of the company in general meeting by way of special resolution and filed with ROC. Provided that the public deposit may be accepted by the eligible companies within the limits specified under section 80 (i.e. upto the amount of its paid up capital and free reserves) by way of ordinary resolution.

Eligible Companies: Deposit from public can only be accepted by following eligible companies:

1. Companies having net worth of not less than Rs. 100 Crore; or

2. Turnover of not less than Rs. 500 Crores; And

Other than Eligible Companies: Other than eligible companies may accept deposits only from its members.      

Deposits:

Deposit from Members: (other than Eligible Companies)

1. Circular is to be approved by the Majority of Directors and to be filed with ROC;

2. After 30 days of such filing, circular is to be issued to the members, by way of courier or electronic means;

3. Circular will be valid until the expiry of 6 months from the date of closure of the financial year in which it is issued or until the date on which financial statements are laid before the Company in AGM whichever is earlier. And a fresh circular is to be issued every year for inviting or accepting deposits.

4. Optional publication of circular in the English and vernacular language newspaper in English language and vernacular language;

5. Credit Rating is to be obtained every year and publish the rating on the circular;

6. Every company shall enter into a contract for providing deposit insurance at least 30 days before the issue of circular;

7. In case of Secured deposits: Charge is to be created to provide security to the deposits. Provided that in case of deposits from members by other than eligible companies, companies may accept unsecured deposit in such case deposit shall be referred as unsecured deposits. In case of secured deposit, Deposit trustee is also to be appointed for creating security for the deposits and deposit trust deed shall be executed atleast 7 days before issuing circular.

8. The company shall maintain Deposit Repayment reserve account and shall keep upto 30 April of every year 15% of the amount of deposit maturing during a financial year and the next following financial year.

9. Every company shall file a return on deposit on or before 30th June, every year and furnish the information to the Registrar as on 31st March that year duly certified by the Auditors.

Deposit from Public:

1. Circular is to be approved by the Majority of Directors and to be filed with ROC;

2. After 30 days of such filing, circular is to be issued to the members, by way of courier or electronic means;

3. Circular will be valid until the expiry of 6 months from the date of closure of the financial year in which it is issued or until the date on which financial statements are laid before the Company in AGM whichever is earlier. And a fresh circular is to be issued every year for inviting or accepting deposits.

4. Circular is to be published one in English language in English newspaper and one in vernacular language in such language newspaper circulated having circulation in the state where the registered office of the company is situated;

5. Credit Rating is to be obtained every year and publish the rating on the circular;

6. Every company shall enter into a contract for providing deposit insurance at least 30 days before the issue of circular;

7. Public Deposits shall be secured deposits and accordingly Charge is to be created to provide security to the deposits within 30 days.

8. Deposit trustee is also to be appointed for creating security for the deposits and deposit trust deed shall be executed atleast 7 days before issuing circular.

9. The company shall maintain Deposit Repayment reserve account and shall keep upto 30 April of every year 15% of the amount of deposit maturing during a financial year and the next following financial year.

10. Every company shall file a return on deposit on or before 30th June, every year and furnish the information to the Registrar as on 31st March that year duly certified by the Auditors.

Exempted Deposits: Following amount shall not be considered as deposit and the rules shall not apply on them:

1. Any amount received or guaranteed from Central Government or State Government or local government;

2. Any amount received from any foreign Government or foreign or international bank pursuant to the fulfillment of FEMA regulations;

3. Any loan or facility received from any banking company or from State Bank of India or its subsidiary bank or any other cooperative bank or any other bank notified by the Central Government;

4. Any amount received from any public financial institution notified by the Central Government;

5. Any amount received against issue of commercial paper or any other instrument;

6. Any amount received by a Company from any other Company;

7. Any amount received and held pursuant to an offer made, towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment applied for;

Provided that it case the securities cannot be allotted within 60 days and the amount is not returned within 15 days thereafter, such amount shall be treated as deposit.

1. Any amount received from the Director of the Company;

2. Any amount raised by issue of bond or debenture secured by the first charge ranking pari passu or any bond or debenture compulsorily convertible into shares within 5 years;

3. Any amount received from the employee of the company not exceeding his annual salary in the nature of non interest bearing security deposit;

4. Any non interest bearing amount received or held in trust;

5. Any amount received in the course of or for the purpose of business of the company:

i. As an advance for the supply of goods or supply of service provided such advance is appropriated against supply of goods or services within 365 days;

ii. As advance received in connection with consideration for property under an agreement or arrangement;

iii. As security deposit for performance of contract for supply of goods or services;

iv. As advance received under long term projects for supply of capital goods

Provided that if the amount received above a, b, d becomes refundable due to reasons the company does not have necessary approvals or permissions to deal in goods or services, such amount shall be considered as deposit after expiry of 15 days from the day they becomes refundable.

1. Any amount brought in by the promoters of the company by way of unsecured loan in pursuance of the stipulation of the lending institution or bank subject to fulfilment of following conditions:

i. The loan is brought in pursuance of the stipulation imposed on the promoters to contribute such finance;

ii. The loan is provided by the promoters themselves or by their relatives or by both;

iii. The exemption under this sub clause shall be available only till the loan is repaid and not thereafter.

2. Any amount received by the Nidhi Company in accordance with the rules made under section 406 of the Act.