DEPOSITS

In accordance with Section 73 of the Companies Act, 2013 a private limited company can accept deposits only from its members. Section 73(2)(a) to (e) does not apply to a private company which complies with either of the following conditions:

• The amount of loan accepted by it from its members does not exceed 100% of its paid-up capital and Free Reserves & Securities Premium account; or
• From the date of incorporation upto 5 years if the company is a start-up; or
• Which complies with following three conditions:
• The company which is not an associate or subsidiary of any other company;
• Borrowing of such company from banks or financial institution or body corporate is less than twice it’s paid-up share capital or Rs. 50 crores, whichever is lesser, and
• Such a company has not defaulted in repayment of money at the time of accepting deposit.

a member is generally defined as (1) the subscriber to a firm's memorandum of association (or articles of incorporation) who is deemed to have agreed to become a member of the firm, and whose name is entered in the firm's register of members when the firm is registered (or incorporated), and (2) every other person who agrees to become a member of the firm and whose name is entered in the firm's register of members. Shareholders who join a firm at its inception are called founder members.