Deposit from Directors is a Exempted Deposit in private as well as public company. Limit not applicable on it.

The term "Deposit" excludes any loans taken from members, directors or their relatives in case of private companies.  Hence private companies are free to take loans from them.

However such immunity is not available to a public company. They can accept deposits only following the conditions specified in Section 58A. The limitation of 10% of paid up capital and reserves applies only where the deposits are to be paid back within 6 months.

As per Rule 2(ix) of Companies (Acceptance of Deposits) Rules, 1975

Any amount received from a person who, at the time of the receipt of the amount, was a director of the Company or any amount received form a relative of a director or its member by a private company.

Therefore, deposit from director is exempted in both cases.

Agree with Ankur Sir,

deposit from director is exempted in both case either public or private. 

Rajeev

Rule 2(ix) of Companies (Acceptance of Deposits) Rules, 1975 clearly excludes 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 from the term of "Deposit".

Hence this exemption is available only to a private company.

Hi Jayashree,

As specified by u that deposit from director of private company is only exempted and not from public company.

But this is the situation before amendment in 2004.

Following amendment are made in 2004 in Public Deposit Rules 1975

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

Provided that the director, relative of a 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". 

I am attaching a word file containing the amendment. you can check this in notification from MCA in year 2004.

Thanks 

Rajeev Nayak

Thanks a lot Rajeev and Ankur.

I wasn't aware of this. Thanks for the updation.

Agree with Rajeev.

The mentioned limit of 10% of Paid up capital and free reseves of the company is applicable for the deposits received by the company from its' shareholders. From the public, the company can receive upto 25% of the amount of Paid up capital and free reseves as calculated under Companies( Acceptance of Deposit Rules) 1975.