Public deposit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2015 Dear All,

Please suggest me whether a public company can take deposit from Director's relative or promoter's relative.

Amol S Joglekar

Amol S Joglekar (Expert)
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28 May 2015 Public company can accept deposit from such people as mentioned by you. The overall limit of Fixed Deposit, however, be maintained.

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2015 Sir, I am confused because these person dont fall in exception given in Companies (Acceptance of Deposit) Rules 2014.
These are exception

“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 legislature;

(ii) any amount received from foreign Governments, foreign/
international banks, multilateral financial institutions
(including, but not limited to, International Finance
Corporation, Asian Development Bank, Commonwealth
Development Corporation and International Bank for
Industrial and Financial Reconstruction), foreign
government owned development financial institutions,
foreign export credit agencies, foreign collaborators,
foreign bodies corporate and foreign citizens, foreign
authorities or persons resident outside India subject to
the provisions of Foreign Exchange Management Act,
1999 and rules and regulations made there under;

(iii) any amount received as a loan or facility from any
banking company or from the State Bank of India or
any of its subsidiary banks or from a banking institution
Acceptance of Deposits 3
notified by the Central Government under section 51 of
the Banking Regulation Act, 1949 (10 of 1949), or a
corresponding new bank as defined in clause (d) of
section 2 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (5 of 1970), or from
a co-operative bank as defined in clause (b-ii) of section 2
of the Reserve Bank of India Act, 1934 (2 of 1934);

(iv) any amount received as a loan or financial assistance
from Public Financial Institutions notified by the Central
Government in this behalf in consultation with the Reserve
Bank of India, regional financial institutions, Insurance
Companies, Scheduled Banks as defined in the Reserve
Bank of India Act, 1934;

(v) any amount received against issue of commercial paper
or any other instrument issued in accordance with the
guidelines or notification issued by the Reserve Bank of
India;

(vi) any amount received by a company from any other
company;

(vii) any amount received and held pursuant to an offer made
in accordance with the provisions of the Act 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 of the securities applied for. If the securities for which application money or advance for such securities was received cannot be allotted within 60 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 15 days from the date of
completion of sixty days, such amount shall be treated as a deposit under these rules. For the purpose of this rule any adjustment of the amount for any other purpose will 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.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 ScheduleIII of the Act excluding intangible assets of the company
or bonds / debentures compulsorily convertible into shares of the company within five years. If such bonds or debentures are secured by the charge of any assets referred to in Schedule III of the Act excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer;

(x) any amount received from an employee not exceeding his annual salary, under a contract of employment with the company in the nature of non-interest bearing security deposit;

(xi) any non-interest bearing amount received or held in trust;

(xii) any amount received in the course of or for the purposes of the business of the company:

(a) as an advance for the supply of goods or provision of
services provided that such advance is appropriated
against supply of goods or provision of services within
a period of three hundred and sixty five days from
acceptance of such advance. In case of any advance
which is subject matter of any legal proceedings before
any court of law, the said time limit of three hundred
and sixty five days shall not apply.
(b) as advance, accounted for in any manner whatsoever,
received in connection with consideration for property
under an agreement or arrangement, provided that
such advance is adjusted against the property in
accordance with the terms of agreement or
arrangement.
Acceptance of Deposits 5
(c) as security deposit for the performance of the contract
for supply of goods or provision of services.
(d) as advance received under long term projects or for
supply of capital goods except those covered under
item (b) above.
If the amount received under (a) (b) and (d) above becomes
refundable (with or without interest) because the
company accepting the money does not have necessary
permission or approval to deal in the goods or properties
or services for which the money is taken, the amount
received shall be deemed to be a Deposit under these
rules.

(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:-
(a) the loan is brought in pursuance of the stipulation
imposed by the lending institutions on the promoters
to contribute such finance; and
(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.
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
6 Acceptance of Deposits
(b) any additional contributions, over and above the
amount under item (a) above, made by the company
as part of such promise or offer, shall be treated as a deposit.

If there other way to accept the deposit from director's relative and promoter's relative, let me know

Amol S Joglekar

Amol S Joglekar (Expert)
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29 May 2015 what is your difficulty? Do you want to accept deposit from these persons or not?

If yes, then why are you landing yourself into EXCEPTIONAL zone?

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2015 Sir,

If I am not falling in the exceptions then how could I raise deposit from these people ?

Amol S Joglekar

Amol S Joglekar (Expert)
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29 May 2015 why do you want to narrow your scope to a definition which in itself is INCLUSIVE. It is not an exact definition....

The definition of deposit is INCLUSIVE. So dont restrict yourself with that....and hence I asked...what is your intention?????? Do you want to accept deposit or not????

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2015 Perhaps Sir,I am not getting what you want to convey,
actually sir, deposit definition is inclusive so these people are falling within the criteria of Deposits, then how could I get deposit from these people because I have to pass Special Resolution and have to comply other requirements as my company is eligible company,

Amol S Joglekar

Amol S Joglekar (Expert)
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01 June 2015 that is what i am trying to convey....there is no HARM in accepting deposit by a PUBLIC COMPANY from the type of people you mentioned in your query.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2015 ok, Thanks sir for your deliberations...........

Amol S Joglekar

Amol S Joglekar (Expert)
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01 June 2015 you are most welcome.
.
.

Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2015 Sir, if you dont mind can you please mention what is the exact requirement accepting deposits from these people ?

Amol S Joglekar

Amol S Joglekar (Expert)
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01 June 2015 https://www.caclubindia.com/articles/acceptance-of-deposits-under-new-companies-act-2013-19390.asp#.VWxEQVIxFh8

follow this link for your ready reference