FAQs based on chapter v acceptance of deposit & companies (acceptance of deposits) rules, 2014
For Private Companies
What is deposit?
Any receipt of money by way of deposit or loan or any other form, by a company, but does not include some receipts as specified under the definition of deposit as given under rule 2 of Companies (Acceptance of Deposits) Rules, 2014
Whether a Private company can accept deposit money from any person?
No. (Absolute prohibition) A Private Company cannot receive from anyone as deposit.
Whether a Private company can accept deposit money from its directors or relative of the directors?
Yes, but this receipt will not be considered as deposit.
A declaration in writing is to be given by the director that the amount is not given out of the funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report.
Whether a Private company can accept deposit money from its own members?
Yes, but not exceeding the limit of 100% of the aggregate of paid-up capital, free reserves, and securities premium account then the provisions of clause (a to e) of sub-section (2) of section 73 shall not apply.
For Public Companies
What is an eligible public company & non-eligible public company?
Eligible public company: Means a public company
| Net Worth | INR 100 crore or more | OR |
| Turnover | INR 500 crore or more | AND |
| Special Resolution | Passed by members at general meeting | Filed MGT-14 |
Non-eligible public company: Means a public company other than eligible.
Whether a Public company can accept deposit money from any person ( i.e. Public)?
- Non-eligible public company– No
- Eligible public company– Yes (within the limit of 25% of paid-up capital, free reserves, and securities premium account)
Whether a Public company can accept deposit money from its directors or relative of the directors?
Yes, but this receipt will not be considered as deposit.
A declaration in writing is to be given by the director that the amount is not given out of the funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report.
Whether a Public company can accept deposit money from its own members?
- Non-eligible public company– Yes (within the limit of 25% of paid-up capital, free reserves, and securities premium account)
- Eligible public company– Yes (within the limit of 25% of paid-up capital, free reserves, and securities premium account)
Note:
What are the routes for acceptance of money other than the way of deposit?
- Issue of fully secured Debentures.
- Issue of Convertible Debentures (convertible within five years).
- Issue of preference shares.
Also, refer notification dated 13th June 2017