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Section 73 of the Companies Act 2013: Prohibition on Acceptance of Deposits from Public

SECTION-73 (Prohibition on Acceptance of Deposits from Public) under CHAPTER-V (Acceptance of Deposits by Companies) of the Companies Act, 2013

(1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter:

Provided that nothing in this sub-section shall apply to a banking company and non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.


(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:—


(a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;


(b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;


(c) depositing such sum which shall not be less than fifteen per cent of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;


(d) providing such deposit insurance in such manner and to such extent as may be prescribed;


(e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits; and


(f) providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company:


Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as "unsecured deposits" and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits.


(3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section.


(4) Where a company fails to repay the deposit or part thereof or any interest thereon under sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit.



(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.





Extra Notes for Readers

(1) The Companies Act, 2013 received the assent of the President on the 29th August, 2013 (Published in the Gazette of India, Extraordinary, Part II - Section 1 by Ministry of Law and Justice, Legislative Department on 30th August, 2013) - link


(2) Section 73 of the Companies Act 2013 was notified by MCA Notification S.O. 902(E) dated 26th March 2014 (w.e.f. 1st April 2014) - link

(3) Further, refer the following rule(s) of the Companies (Acceptance of Deposits) Rules, 2014 - link
  • For sub-section (2) of section 73:- refer Rule 3 - Terms and Conditions of Acceptance of Deposits by Companies
  • For clause (a) of sub-section (2) of section 73:- refer Rule 4 - Form and Particulars of Advertisements or Circulars;
  • For clause (d) of sub-section (2) of section 73:- refer Rule 5 - Manner and extent of deposit insurance
[Note: please also check further amendments to the Companies (Acceptance of Deposits) Rules, 2014]


(4) Exemption to Private Companies - Extracts from MCA Notification G.S.R. 464(E) dated 5th June 2015 - link

Serial
Number
Chapter/Section number/Sub-section(s) in the Companies Act, 2013
Exceptions/Modifications/Adaptations
6.
Chapter V, clauses (a) to (e) of sub-section (2) of section 73.
Shall not apply to a private company which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.

(5) Exemption to Specified IFSC Public Company - MCA Notification G.S.R. 08(E) dated 4th January, 2017 - link

Serial
Number
Provisions of the Companies Act,    2013 (18 of 2013)
Exceptions/Modifications/Adaptations
20.
Clauses (a) to (e) of subsection (2) of section 73
Shall not apply to a Specified IFSC public company which accepts from its members, monies not exceeding one hundred per cent. of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.

(6) The Companies (Removal of Difficulties) Second Order, 2014 dated 2nd June 2014: (link)
Jurisdiction, Powers, authority and functions of Company Law Board.- Until a date is notified by the Central Government under sub-section (1) of Section 434 of the Companies Act, 2013 (18 of 2013), the Company Law Board constituted in pursuance of sub-section (1) of Section 10E of the Companies Act, 1956 (1 of 1956) shall exercise the jurisdiction, powers, authority and functions under subsection (4) of Section 73 of the Companies Act, 2013 (18 of 2013).

(7) MCA Clarification on Amounts received by private companies from their members, directors or their relatives before 1st April, 2014 - Clarification regarding applicability of Companies (Acceptance of Deposits Rules, 20l4) - MCA General Circular 5/2015 dated 30.03.2015 - link








This page was last updated on 28th February, 2017.

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