Can Public Ltd Co. accept deposits from Directors

Page no : 2

Anand (Practicing CA) (190 Points)
Replied 10 August 2012

Can anyone provide a step by step guid for comling with provisions of sec. 58A and Depoait Acceptance Rules for unlisted public company ...

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Meet Joshi (Company Secretary) (275 Points)
Replied 05 December 2013

Originally posted by : CS Ankur Srivastava
	Dear Friend, Ofcourse, a public company can accept deposit from its directors. However, it is an exempted deposit. As per Acceptance of Deposit Rules, 1975 Rule 2(b)(ix) deposit meany any deposit of money .. but does not includes.... Any amount received from a person who at the time of the receipt of the amount was a director of the company. Provided that the director from whom the money is recieved furnishes to the company at the time of giving the money a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others.

Dear Ankur Shrivastava Sir

As per my interpretation Ankur Garg sir is Right as the Text as per the Rule 2 (b) (ix) of the Companies (Acceptance of Deposits) Rules, 1975 (as mentioned below) clearly mention that any amount received by Private Company it means sub rule only applies to Private Company.

any amount received by a private company from a person who, at the time of the receipt of the amount, was a director, relative of director or member:

And the text you have mentioned, according to me it is as per the “Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998” issued by RBI.

This is my interpretation. Others views are solicited.

CA Dileep Nihalani (CA) (29 Points)
Replied 02 February 2014

Hi the current wording on MCA website says

https://www.mca.gov.in/Ministry/actsbills/rules/CAoDR1975.pdf

(ix) any amount received by a private company from a person who, at the time
of the receipt of the amount, was a director, relative of director or
member:
Provided that the director or member, as the case may be, from whom
money is received, furnishes to the company at the time of giving the
money, a declaration in writing to the effect that the amount is not being
given out of funds acquired by him by borrowing or accepting from
others;

Shall we conclude that the provisions of public deposit will attract to public company borrowing from its diectors.