Meaning of Deposit
As per section 2(31) of the Companies Act,2013 ‘deposit’ includes any receipt of money by way of deposit or loan or in any other form by a company.
The procedure of Acceptance of deposit
As per section 73 of the Companies Act,2013 a company may accept deposits from its members on fulfilling such terms and conditions, including the provision of security or for the repayment of deposits with interest amount, as may be agreed upon between the company and its members:
- A resolution should be passed by the company in general meeting,
- subject to such rules as may be prescribed in consultation with the Reserve Bank of India and subject to the fulfillment of following conditions:
- A company shall issue a circular to the members of the company including therein a statement showing the financial position, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and such manner as prescribed by the rules.
- A company shall file a copy of the circular along with such a statement with the Registrar of Company (ROC) within 30 days before the date of the issue of the circular.
- A company shall deposit, on or before the 30th day of April each year, such amount which shall not be less than 20% of the number of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account.
- A company shall certify that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of the Companies Act, 2013 or payment of interest on such deposits and where a default had occurred, the company made good the default and a period of five years had elapsed since the date of making good the default.
- A company shall provide security if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company.
Provided that in the case when a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as ‘‘unsecured deposits’’ and shall be so quoted in every circular, form, advertisement, or any document related to invitation or acceptance of deposits.