Meaning: -Deposits is a loan received by the company
from an investor on certain terms and conditions about repayment of principal
amount wit interest. Deposits are accepted only by public companies. Private
companies are restricted to accept the deposits from general public.
Definition: -According to
Companies Act 1956 the term deposits means 'Any deposit of money with the
company and any amount borrowed by the company'.
According to the provisions
of Companies (Amendment of Deposits) Rules 1975
and amendments made thereafter, all companies except the companies doing
banking and finance business can accept deposits.
There
are some restrictions or limitations on the acceptance of such deposits:
1.
A company can accept deposits up to
25% of the total of its paid up
share capital and free reserve.
2.
A company can accept deposits in
the form of
a. Unsecured
debentures
b. Deposits
from its members and
c.
Deposits guaranteed by the
directors up to 10% of the total of
its paid up capital and free reserves.
3.
In all, a company can accept
deposits up to 35% of the total of
its shares capital and free reserves.
4.
A government company can accept
deposits up to 35% of paid up capital
and free reserves.
5.
The application for deposits must
be made in the prescribed form supplied by the company only.
6.
The depositor should give a
declaration that the amount of deposits is not borrowed and not accepted as
deposit by him from any other person.
7.
According to the provision of the
companies Act a private company cannot accept deposits from the general public.
8.
A company cannot accept deposits payable on demand.
9.
A company can accept deposits for a
minimum period of 6 months and maximum period of 3 years i.e. 36
months.
10.
On acceptance of deposits company
must issue a deposit receipt with 8weeks from the date of receipt of money to
the depositors.
11.
A maximum rate of interest payable
on deposit is 12.5% p.a. as per the Companies Amendment Rules 2001.
12.
Company can pay brokerage on deposits collected,
through brokers, depending on period of deposits at the following rate:
|
Term
|
Percentage
|
|
up to 1 years
|
1%
|
|
more than 1 year
|
1.5%
|
|
More than 2 year
|
2%
|
13.
Company accepting deposits must
keep a Registrar of Deposits at the registered office of the company.
14.
Company must file with the
Registrar, a return of deposits duly certified by the auditor of the company on
31st March every year. A
copy of such return must also be submitted to the Reserve Bank of India.
15.
Any deposit received by a company
against the provision of the Act must be paid back by the company within 30 days of the deposits.
