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Public deposit in private limited

Amol Patil (Executive - Accounts) (52 Points)

02 September 2011

XYZ private Limited company,company is in business of developing residential plot and wants deposits from public. It has a scheme in which, if a person invest amount in company's 3 years, 5 years & 6 Years (Like R.D. F.D. etc) and at the time of maturity pay him some amount. as per agreement between company & Depositors
can company do so?
if yes what the procedures?

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10 Replies

Purushottam Joglekar (Finance Professional) (45 Points)
Replied 02 September 2011

I am trying to resolve your question. I will back in some hours.

SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 02 September 2011

Though there is some exemption in clause vi of the acceptance of deposit rules, but i dont think it can override the restriction imposed u/s 3 of the comanies act and hence a pvt co cant accept any deposit from persons other than director, members and their relatives.

waiting for others to add their comments

1 Like

AMIT MISHRA (Legal Professional) (393 Points)
Replied 02 September 2011

Hi Amol,

I agree with Santosh in your case it appears that this would be a clear violation of Section 3 of the Companies Act. The Company can accept money only from its members or directors and no outsider.

Thanks & Regards

Amit Mishra

BSamrish & Co.

New Delhi

1 Like

Amol Patil (Executive - Accounts) (52 Points)
Replied 03 September 2011

Dear Santosh,

But some Private Limited Companyes Accepts Direct Deposits from public

Amol

Amol Patil (Executive - Accounts) (52 Points)
Replied 03 September 2011

Dear Amit,

But some Private Limited Companyes Accepts Direct Deposits from public

Amol

CS Shivi Reddy (COMPANY SECRETARY) (175 Points)
Replied 03 September 2011

Dear Amol,

Pvt. Companies caanot accept deposits from public until and unless they are NBFCS accepting deposits from public dat is non-banking financial companies.

Regards

Shivi

1 Like

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 03 September 2011

Under section 3(1)(iii) there is Prohibition to invitation or acceptance of deposits from persons other than its members, Directors or the relatives.

1 Like

Mousumi Baneerjee (SELF EMPLOYED) (31 Points)
Replied 08 November 2011

CAN ANYONE PLEASE GIVE ME A DRAFT AGREEMENT OF LOAN TAKEN BY A PVT LTD COMPANY FROM ITS DIRECTOR'S SPOUSE...........

Rajesh Bhati (MBA Finance) (32 Points)
Replied 09 November 2011

No Pvt. Company cant do that .............

Udit Mathur (-) (88 Points)
Replied 09 November 2011

(d) prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives

Hence Company can't Accept Public Deposit

But

You can Make Practical Public Invitation by Cracking these Line and Proving that the Invitation is not Public : Section 67(3)

(3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances—

(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscripttion or purchase by persons other than those receiving the offer or invitation; or

(b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation:

¹[Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more: