Acceptance of deposits from public by certain companies

(1)

Notwithstanding anything contained in section 73, a public company , having such net worth or turnover as may be prescribed, may accept deposit from persons other than its members subject to compliance with the requirements provided in sub-section

(2)

of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe:

Proviso

Provided that such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits:

Proviso

Provided further that every company accepting secured deposits from the public shall within thirty days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of the deposit holders in accordance with such rules as may be prescribed.

(2)

The provisions of this Chapter shall, mutatis mutandis , apply to the acceptance of deposits from public under this section.

Section 76A. Punishment for contra-vention of section 73 or section 76.

Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,—

(a)

the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees or twice the amount of deposit accepted by the company, whichever is lower. one crore rupees but which may extend to ten crore rupees; and

(b)

every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years and with fine seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both:

Proviso

Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.

Notes, amendments & references (7)

Refer Rule 2(1) (e) – Companies(Acceptance of Deposits)Rules,2014.To view the rule, Click Here

Deposit includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India

See Companies (Acceptance of Deposits) Rules, 2014. To view the rule, Click Here

Section 76A inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification S.O. 1440(E). To view the notification, Click Here

Refer Rule 73 National Company law Tribunal Rules 2016.To view the rule, Click Here

Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification, Click Here

or with both: Omitted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification, Click Here