TaxTMI 
TaxTMI 
Chapter V - The Companies (Acceptance of Deposits) Rules, 2014
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.... a company other than - (i) a banking company; (ii) a non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) registered with the Reserve Bank of India; (iii) a housing finance company registered with the National Housing Bank established under the National Housing Bank Act, 1987 (53 of 1987); and (iv) a company specified by the Central Government under the proviso to sub-section (1) of section 73 of the Act. 2. Definitions.- (1) In these rules, unless the context otherwise requires, ___ (a) "Act" means the Companies Act, 2013 (18 of 2013); (b) "Annexure" means the Annexure attached to these rules; (c) "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 Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government, 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 Legis....
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....d that - (a) Without prejudice to any other liability or action, if the securities for which application money or advance for such securities was received cannot be allotted within sixty days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules. (b) any adjustment of the amount for any other purpose shall not be treated as refund. (viii) 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 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 loans or deposits from others; (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 inta....
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....e 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:- (a) the loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance; (b) the loan is provided by the promoters themselves or by their relatives or by both; and (c) the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter; (xiv) any amount accepted by a Nidhi company in accordance with the rules made under section 406 of the Act. Explanation.- For the purposes of this clause, any amount.- (a) received by the company, whether in the form of instalments or otherwise, from a person with promise or offer to give returns, in cash or in kind, on completion of the period specified in the promise or offer, or earlier, accounted for in any manner whatsoever, or (b) any additional contributions, over and above the amount under item (a) abov....
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....s for repayment earlier than six months from the date of deposit or renewal, as the case may be, subject to the condition that- (a) such deposits shall not exceed ten per cent. of the aggregate of the paid up share capital and free reserves of the company, and (b) such deposits are repayable not earlier than three months from the date of such deposits or renewal thereof. (2) Where depositors so desire, deposits may be accepted in joint names not exceeding three, with or without any of the clauses, namely, "Jointly", "Either or Survivor", "First named or Survivor", "Anyone or Survivor". (3) No company referred to in sub-section (2) of section 73 shall accept or renew any deposit from its members, if the amount of such deposits together with the amount of other deposits outstanding as on the date of acceptance or renewal of such deposits exceeds twenty five per cent. of the aggregate of the paid-up share capital and free reserves of the company. (4) No eligible company shall accept or renew- (a) any deposit from its members, if the amount of such deposit together with the amount of deposits outstanding as on the date of acceptance or renewal of suc....
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....ving wide circulation in the State in which the registered office of the company is situated. (2) Every eligible company intending to invite deposits shall issue a circular in the form of an advertisement in Form DPT-1 for the purpose in English language in an English newspaper and in vernacular language in one vernacular newspaper having wide circulation in the State in which the registered office of the company is situated. (3) Every company inviting deposits from the public shall upload a copy of the circular on its website, if any. (4) No company shall issue or allow any other person to issue or cause to be issued on its behalf, any circular or a circular in the form of advertisement inviting deposits, unless such circular or circular in the form of advertisement is issued on the authority and in the name of the Board of directors of the company. (5) No circular or a circular in the form of advertisement shall be issued by or on behalf of a company unless, not less than thirty days before the date of such issue, there has been delivered to the Registrar for registration a copy thereof signed by a majority of the directors of the company as constituted at the time th....
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....m paid on the insurance of such deposits shall be borne by the company itself and shall not be recovered from the depositors by deducting the same from the principal amount or interest payable thereon. (4) If any default is made by the company in complying with the terms and conditions of the deposit insurance contract which makes the insurance cover ineffective, the company shall either rectify the default immediately or enter into a fresh contract within thirty days and in case of non-compliance, the amount of deposits covered under the deposit insurance contract and interest payable thereon shall be repaid within the next fifteen days and if such a company does not repay the amount of deposits within said fifteen days it shall pay fifteen per cent. interest per annum for the period of delay and shall be treated as having defaulted and shall be liable to be punished in accordance with the provisions of the Act. 6. Creation of security.- (1) For the purposes of providing security, every company referred to in sub-section (2) of section 73 and every eligible company inviting secured deposits shall provide for security by way of a charge on its assets as referred to in Schedul....
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....d in Form DPT-2 at least seven days before issuing the circular or circular in the form of advertisement. (3) No person including a company that is in the business of providing trusteeship services shall be appointed as a trustee for the depositors, if the proposed trustee - (a) is a director, key managerial personnel or any other officer or an employee of the company or of its holding, subsidiary or associate company or a depositor in the company; (b) is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company; (c) has any material pecuniary relationship with the company; (d) has entered into any guarantee arrangement in respect of principal debts secured by the deposits or interest thereon; (e) is related to any person specified in clause (a) above. (4) No trustee for depositors shall be removed from office after the issue of circular or advertisement and before the expiry of his term except with the consent of all the directors present at a meeting of the board. Provided that in case the company is required to have independent directors, at least one independent di....
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....erson to whom his deposits shall vest in the event of his death and the provisions of section 72 shall, as far as may be, apply to the nomination made under this rule. 12. Furnishing of deposit receipts to depositors.- (1) Every company shall, on the acceptance or renewal of a deposit, furnish to the depositor or his agent a receipt for the amount received by the company, within a period of twenty one days from the date of receipt of money or realisation of cheque or date of renewal. (2) The receipt referred to in sub-rule (1) shall be signed by an officer of the company duly authorised by the Board in this behalf and shall state the date of deposit, the name and address of the depositor, the amount received by the company as deposit, the rate of interest payable thereon and the date on which the deposit is repayable. 13. Maintenance of liquid assets and creation of deposit repayment reserve account.- Every company referred to in sub-section (2) of section 73 and every eligible company shall on or before the 30th day of April of each year deposit the sum as specified in clause (c) of the said sub-section with any scheduled bank and the amount so deposited shall not be util....
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.... higher than the rate so reduced : Provided that nothing contained in this rule shall apply to the repayment of any deposit before the expiry of the period for which such deposit was accepted by the company, if such repayment is made solely for the purpose of- (a) complying with the provisions of rule 3; or (b) providing war risk or other related benefits to the personnel of the naval, military or air forces or to their families, on an application made by the associations or societies formed by such personnel, during the period of emergency declared under article 352 of the Constitution : Provided further that where a company referred to in under sub-section (2) of section 73 or any eligible company permits a depositor to renew his deposit, before the expiry of the period for which such deposit was accepted by the company, for availing of a higher rate of interest, the company shall pay interest to such depositor at the higher rate if such deposit is renewed in accordance with the other provisions of these rules and for a period longer than the unexpired period of the deposit. Explanation: For the purposes of this rule, where the period for which the depo....
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....f commencement of the Act.- For the purposes of clause (a) of sub-section (1) of section 74, the statement shall be in Form DPT-4. 21. Punishment for contravention.- If any company referred to in sub-section (2) of section 73 or any eligible company inviting deposits or any other person contravenes any provision of these rules for which no punishment is provided in the Act, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first day during which the contravention continues. FORM DPT [File No. 1/8/2013-CL-V] (Renuka Kumar) Joint Secretary to the Government of India ============= Document 1 FORM DPT-1 Annexure 25 CIRCULAR OR CIRCULAR IN THE FORM OF ADVERTISEMENT INVITING DEPOSITS [Pursuant to section 73 (2)(a) and section 76 and rule 4(1) and 4(2) of the Companies (Acceptance of Deposits) Rules, 2014] The circular or circular in the form of advertisement shall contain the following: 1. GENERAL INFORMATION a. Name, address....
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....e of interest; e. Total number of depositors; 27 f. Default, if any, in repayment of deposits and payment of interest thereon, if any, including number of depositors, amount and duration of default involved; g. Any waiver by the depositors, of interest accrued on deposits; 4. FINANCIAL POSITION OF THE COMPANY a. Profits of the company, before and after making provision for tax, for the three financial years immediately preceding the date of issue of circular or advertisement; b. Dividends declared by the company in respect of the said three financial years; interest coverage ratio for last three years (Cash profit after tax plus interest paid or interest paid) c. A summary of the financial position of the company as in the three audited balance sheets immediately preceding the date of issue of circular or advertisement; d. Audited Cash Flow Statement for the three years immediately preceding the date of issue of circular or advertisement; e. Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company. 5. A DECLARATION BY THE DIRECTORS THAT- ....
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.... to the deposit holders, options available, and debt equity ratio and debt service coverage ratio, if applicable. DETAILS OF CHARGE CREATED:- 1. Nature of charge created; 2. Rank of charge created viz. first, second, pari passu, residual, etc; 31 3. Minimum security cover to be provided; 4. Asset(s) on which charge is created; 5. Other particulars of the charge, e.g., time period of charge, rate of interest, name of the charge holder; 6. Provision for subsequent valuation; 7. Undertaking by the company not to create further charge or encumbrance over the trust property without the approval of the trustee; 8. A statement that the company may hold and enjoy all the mortgaged premises and carry on the business of the company until the security becomes enforceable. DETAILS OF DEPOSIT INSURANCE 1. Name of the insurer; 2. Amount of the insurance cover; 2. Other terms and conditions governing deposit insurance contract. PARTICULARS OF THE APPOINTMENT OF DEPOSIT TRUSTEE(S): - 1. The conditions for the appointment, resignation and removal of such trustee, which shall ensure that- (a) the appointment of the trustee....
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....create any further charge on the mortgaged premises or any part thereof without the prior approval of the trustees or deposit holders; f. If the company fails to comply with provisions of the Act; g. If the Trustees have reasonable grounds to conclude that the security of the deposit holders is in jeopardy. 2. Covenant to the effect that in case of the security becoming enforceable, the trustees shall enter into and take possession 34 4 of the property on which charge is created and shall, in consultation with the other charge holders forthwith take steps to determine whether the business of the company may be allowed to be carried on, the steps to be taken for changes in management of the company, if any, actions necessary for protection of the mortgaged property and other steps required for protecting the interests of the depositors. 3. Covenant to the effect that the trustees may lodge a claim under insurance for payment to depositors in terms of deposit insurance. 4. Covenant to the effect that the balance proceeds of any sale of the mortgaged premises shall, after setting off of all costs, charges and expense....
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....ring before 31st March next year and following next year: (b) Amount required to be invested in liquid assets: (c) Details of liquid assets- (a) Amount in current or other deposits account, free from charge or lien, with any scheduled bank (b) Unencumbered securities of Central/State Government Face value Market value (c) Unencumbered trust securities Face value Market value Date of investment/ deposit Amount 12. Particulars of deposit insurance: 38 88 (a) Date of entering into deposit insurance contract (b) Name of the insurer (c) Premium payable (d) Premium paid upto: (e) Maximum ceiling limit for every depositor 13. Particulars of charge (a) Date of entering into trust deed (b) Name of the trustee (c) Short particulars of the property on which charge is created for securing depositors (d) Value of the property Signature Date: Place: Attachment: 1. Auditor's certificate; 2. Deposit insurance contract; 3. Copy of trust deed; 4. Copy of instrument creating charge; 5. List of depositors indicating name, address, amount deposited, repaid during the year and outst....