The following is the procedure to accept deposits from members:
(i) Hold Board Meeting:
- Secretary arranges for a Board Meeting.
- In the Board Meeting, decisions regarding the amount of deposit, terms of issue of deposit, etc. are decided.
(ii) Hold a General Meeting:
- To seek approval from shareholders for accepting deposits, the company holds a general meeting.
- A special resolution is passed in a general meeting and filed with the Registrar of Companies.
(iii) Hold Board Meeting:
- After getting shareholder’s approval, a Board meeting is held to approve the draft of the circular for inviting applications for deposits from members.
- The draft should be signed by a majority of the Directors of the company.
(iv) Appoint Banker:
A Banker is appointed for collecting the application forms and the Deposit money on behalf of the company.
(v) Obtain Credit Rating:
- Credit rating agencies rate the company’s deposit.
- The rating given by the Credit Rating Agency must be mentioned in the circular.
(vi) Appoint Deposit Trustee:
- Company appoints Deposit Trustees.
- The Trust deed is signed at least 7 days before issuing the circular.
(vii) Take Deposit Insurance:
The company takes Deposit Insurance at least 30 days before issuing the circular.
(viii) File a copy with Registrar of Companies:
A copy of the circular is filed with the Registrar of Companies and can be issued to the members-only after 30 days of filing.
(ix) Issue circular to members:
- The company sends the circulars to members after 30 days of filing them with the Registrar.
- It is sent by registered post, speed post, or email. The company may even publish the circular in newspapers.
(x) Upload circular on company’s website:
- An eligible public company has to upload the circular on the company’s website.
- Whereas, it is optional for a private company and other public companies.
(xi) Collect application form and money:
The company informs the bank to collect the application form along with the deposit money.
(xii) Issue of Deposit Receipt:
- A deposit Receipt is issued by the company.
- It should be issued within 21 days from the date of receipt of the money or realization of the cheque.
(xiii) Create charge on assets:
If a company accepts secured deposits, it has to create a charge on its assets within 30 days of acceptance of deposits.
(xiv) Make entries in Register of Deposits:
- Secretary has to enter the details of deposits in the Register of Depositors within 7 days from the date of issue of Deposit Receipt.
- It has to be signed by an authorized officer.
(xv) File Return of Deposits:
- The company has to file a return of deposit before 30th June every year.
- The return has details of deposits with the company as of 31st March.