1. UNDER NEW COMPANIES ACT 2013
DEPOSITS & LOANS
UNDER NEW COMPANIES ACT 2013

2. DEFINITION OF DEPOSIT
As per Clause 2(a) of Companies (Acceptance of Deposits) Rules, 2014 “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 Central Govt., State Govt., from other sources guaranteed by CG/ SG, local authority or statutory authority. (ii) amount received from Foreign Govt., Foreign Banks, Multilateral financial institutions, Foreign Collaborations, Foreign Govt. owned development financial institutions, Foreign Bodies Corporate, Foreign Citizens, foreign authorities or person resident outside India subject to provisions of FEMA, (iii) Loan or Facility from any banking company , SBI or its subsidiary banks or any bank institution notified by Central Govt. U/S 51 of Banking Regulations Act, 1949 or cooperative Bank Continued………..

3. (vi) Amount received by a Company from any other Company
(iv) Loan from Public Financial Institutions notified by Central Govt., regional financial Institutions or scheduled Bank as defined in RBI Act, 1934
(v) Issue of Commercial Paper or any other instruments issued in accordance with the guidelines or notification issued by RBI
(vi) Amount received by a Company from any other Company
(vii) Amount received towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment.
Provided: if the securities against the above money received not issued with in 60 days and such amount is not refunded within 15 days from completion of 60 days, such amount shall be treated as a deposit
(viii)Amount received from a person who at the time of receipt was a director of the Company
Continued…………….

4. Provided that the director furnishes to Company a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or loan or deposit from others
(ix) Issue of Bonds or Debentures secured by first charge on any assets excluding intangible assets of the Company & Bonds or debentures compulsorily convertible into shares of the Company
(x) Received from a employee of the Company not exceeding his salary under contract of employment
(xi) Non interest bearing amount received or held in trust
(xii) Amount received in the course of, or for the purposes of, the business of the Company.

5. (xiii) Amount brought in by 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 following conditions: (a) The loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance. (b) The loan is provided by the promoters themselves or by their relatives or both (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)Amount accepted by a Nidhi company in accordance with the rules made under section 406 of the Act

6. TERMS & CONDITIONSOF ACCEPTANCE OF DEPOSITS
No Company shall accept or renew any deposit, whether secured or unsecured, which is repayable on demand or upon receiving a notice within a period of less than 6 months or more than 36 months from the date of acceptance or renewal of such deposit :
Provided that a Company may, for the purpose of meeting any of its short term requirements of the funds, accept or renew such deposits for repayment earlier than 6 months from the date of deposit or renewal, as the case may be, subject to the condition that-
(a) such deposit shall not exceed 10% of the aggregate of paid up capital and free reserve.
(b) such deposits are repayable not earlier than 3 months from the date of such deposits or renewal thereof.
Note: Free Reserve does not include Share Premium (read sec 2(43) of companies Act 2013)

7. DEPOSITS FROM MEMBER OTHER THAN ELIGIBLE COMPANIES
From the Members shall not exceed 25% the aggregate of the paid-up share capital and free reserves of the Company. The 25% limit is to be computed considering such deposits together with the amount of other deposits outstanding as on the date of acceptance or renewal of such deposits
ELIGIBLE COMPANIES (a Public Company having net worth of 100 cr. Or more Rupees or a turnover of not less than Rs. 500 cr. And filed a special resolution with ROC before making any invitation to Public for accepting deposits)
From the members shall not exceed 10% of the aggregate of the paid-up share capital and free reserves of the Company. The 10% limit is to be computed considering such deposits together with the amount outstanding from the members on date of acceptance or renewal of such deposits.
From the Public shall not exceed 25% of the aggregate of the paid-up share capital and free reserves of the Company. The 25% limit is to be computed considering such deposits together with the amount outstanding from the Public on date of acceptance or renewal of such deposits.

8. INTEREST & BROKERAGE ON DEPOSITS
Interest on deposit and payment of brokerage to authorized person shall not exceed the maximum rate prescribed by the Reserve Bank of India.
If at any time the Depositor request for repayment after expiry of a period of six months from the date of deposit but before the maturity period, the rate of interest payable by the Company on such deposit shall be reduced by one per cent from the contracted rate.
Where a Company permits a depositor to renew his deposit, before the expiry of the contract period for availing of a higher rate of interest, the Company shall pay interest to such depositor at the higher rate if such deposit is renewed in accordance with the other provisions of these rules and for a period longer than the unexpired period of the deposit.
A penal rate of interest of eighteen per cent per annum shall be payable for the overdue period in case of deposits, whether secured or unsecured, matured and claimed but remaining unpaid.

9. FORMS & PARTICULARS OF ADVERTISEMENTS
Every Company intending to invite deposit from its members shall issue a circular to all its members by registered post with acknowledgement due or speed post or by electronic mode or publish the circular in the form of an advertisement in Form No. DPT-1 (English and Vernacular).
the draft Circular/Form of Advertisement should be approved by Board and must be signed by majority of the directors of the Company.
At least 30 days before issue of Circular/Form of Advertisement, deliver a copy of Circular/Form of Advertisement approved by Board to the Registrar of Companies for registration.
The Circulars/ Form of Advertisement shall be valid until the expiry of six months from the date of closure of the financial year in which it is issued or until the date on which the financial statement is laid before the Company in general meeting or, where the annual general meeting for any year has not been held, the latest day on which that meeting should have been held in accordance with the provisions of the Act, whichever is earlier.
Effective date of issue of circular shall be the date of dispatch of the circular

10. FORM OF APPLICATION FOR DEPOSITS AND DEPOSIT RECEIPT TO DEPOSITOR
Deposit to be accepted only in the prescribed form.
The application shall contain a declaration from the depositor to the effect that the deposit is not being made out of any money borrowed by him from any other person
A depositor may, at any time, make a nomination.
Deposit receipt shall be issued in the prescribed format and shall be signed by an officer duly authorized by Board, within a period of two weeks from the date of receipt of money or realization of cheques.

11. DEPOSIT INSURANCE
At least 30 days before issue of Circular/Form of Advertisement enter into a contract providing for deposit insurance to cover both principal and interest thereon
If the deposit amount is less than Rs.20,00/- the insurance coverage will be full amount of deposit amount and if the deposit amount is more than Rs.20,000/- then minimum coverage is not less than Rs.20,000/-
As deposit can be accepted/ matured at regular intervals, the total deposit insurance coverage shall be updated from time to time
The Insurance Premium shall be borne by the Company.
Fresh insurance coverage to be taken within 30 days if at any time terms and conditions of the deposit insurance contract which makes the insurance cover ineffective. In case of non compliance, repay the principal & interest within the next 15 days otherwise pay 15% pa interest for the period of delay.

12. CREATION OF SECURITY APPLICABLE IF SECURED DEPOSITS ACCEPTED
Company inviting secured deposits shall provide for security by way of a charge on its assets as referred to in Schedule III of the Act excluding intangible assets of the Company and the market value of assets charged must be assessed by a registered valuer.
The security (not being in the nature of a pledge) for deposits shall be created in favour of a trustee for the deposit holders on specific movable and immovable property of the Company.

13. APPOINTMENT OF DEPOSIT TRUSTEES
APPLICABLE WHERE SECURED DEPOSITS ACCEPTED
Before issue of Circular/Form of Advertisement, appoint one or more deposit trustees for creating security for the deposits.
The Company shall execute a deposit trust deed in Form DPT 2 at least 7 days before issuing the circular or circular in the form of advertisement.
The Circular/Form of Advertisement should contain a statement that the Deposit Trustee(s) have given their consent to act as Deposit Trustee.
The Deposit trustee(s) shall not be removed from office after the issue of circular or advertisement and before the expiry of his term except with the consent of all the directors present at a meeting of the board.

14. CREATION OF DEPOSIT REPAYMENT RESERVE ACCOUNT
Every Company to create a deposit repayment reserve account and deposit a sum not less than 15% of the deposit amount matured during the current financial year with any schedule bank. The amount deposited shall not at any time fall below fifteen per cent of the amount of deposits maturing until the current financial year and the next financial year.
The amount deposited in deposit repayment reserve account shall not be utilized for any purpose other than for the repayment of deposits

15. REGISTER OF DEPOSIT & RETURN TO ROC
Make entries in the register (information to be entered as per rules) within seven days from the date of issuance of the deposit receipt and such entries shall be authenticated by a director or secretary of the Company or by any other officer authorized by the Board for this purpose.
The registers shall be preserved in good order for a period of not less than eight years from the financial year in which the latest entry is made in the register.
File deposit return in Form DPT-3 by furnishing information contained therein as on 31st day of March duly audited by auditors before 30th June every year.

16. REPAYMENT OF DEPOSIT ACCEPTED BEFORE COMMENCEMENT OF THIS ACT
Any deposit accepted prior to new act and interest due thereon if remains unpaid or becomes due at any time on or after commencement of the new Act then:
file, within a period of three months from such commencement or from the date on which such payments, are due, with the Registrar a statement of all the deposits accepted by the Company and sums remaining unpaid on such amount with the interest payable thereon along with the arrangements made for such repayment in Form DPT-4,and
Repay within one year from such commencement or from the date on which such payments are due, whichever is earlier, or make an application to the Tribunal for allowing further time to the Company to repay the deposit.
In case of failure to repay the deposit within time, company will be punishable with fine which can be between Rs. 1 Cr. to Rs. 10 Cr. Every officer will be punishable with fine of Rs. 25 Lacs to 2 Cr. with imprisonment of 7 years

17. LOAN TO DIRECTOR
Section 185 prohibits loan by company , whether public or private, to or guarantee or security for loan taken by:
Directors
Director of holding company
Partners or Relatives of Directors
Firm in which director or relative of director is partner
Pvt. Co. in which director (of lending company) is director or member
Body Corporate in which 25% or more voting power rests with one or more directors (of lending company)
Body Corporate whose Board act on directions of director/board of lending company.
Not covered:
Loan to MD/WTD where the loan is given as a part of the condition of service extended by the Company to all its employees or pursuant to any scheme approved by members by a special resolution.
Loan provided in ordinary course of business at interest (not less than bank rate)

18. LOAN & INVESTMENT BY COMPANY
There can not be investment through more than 2 layers of investment companies. This means Company A can invest only in Company B and C through the subsidiary routes and can not go beyond this.
Exemptions:
Acquiring any other company incorporated outside India. Such Company has investment subsidiary beyond 2 layers as per law of Host country
A subsidiary company from having any investment subsidiary for the purpose of meeting of the requirement under any law framed under any law for the time being in force.
Limits for Investment & Guarantee: Higher of below:
60% of Paid up Capital + Free Reserve + Security Premium OR 100% of Free Reserve + Security Premium
The above limit can be exceeded with prior approval by means of Special resolution passed at AGM

19. Approvals of Board and Public Financial Institutional
Prior approval of the public financial institution shall also be required where any term loan is subsisting.
Prior approval of PFI not required where the aggregate of the loans , investment or security does not exceed the limit of 60% and there is no default in repayment of loan installments or payment of interest thereon as per the terms and conditions of such loan to the Public Financial Institution
Register
The Company shall must maintain a Register under this section and it shall be kept at the Registered office of the Company which shall be prescribed.
This register shall be opened for inspection and in case of any member, if demand its extract, the company shall provide them as per prescribed fee.
Disclosure
The Company shall disclose in Financial Statement the full particulars of loans given, investment made or guarantee given or security provided.
The Company will also disclose in its Report about its utilization