Only Eligible Public Companies can accept deposits from the public.
Following is the procedure to be followed for accepting deposits from the public:
(i) Hold Board Meeting:
- A resolution is passed in the Board Meeting for accepting the deposits from the public.
- The details of the amount of deposit, terms and conditions of issue, etc. are decided in this meeting.
(ii) Hold a General Meeting:
- A General Meeting is held by the company for seeking shareholders’ approval for accepting deposits.
- A Special resolution is passed and filed with the Registrar of Companies and if needed with RBI also.
(iii) Hold Board Meeting:
- The board meeting is held to verify and approve the draft of the advertisement.
- The draft should be signed by the majority of the Directors of the company.
(iv) Appoint Banker:
The company has to appoint a banker so that the applicants can submit their application form along with the deposit money.
(v) Obtain Credit Rating:
- The company has to obtain a Credit rating from a recognized Credit Rating Agency.
- This helps in the goodwill of the company.
- This credit rating should be mentioned in the advertisement.
(vi) Appoint Deposit Trustee:
- The company appoints Deposit Trustees when secured deposits are issued.
- It is a contract between the company and Trustee i.e. Deposit Trustee Deed.
- The Deposit Trust deed contains the terms and conditions.
- The deed has to be signed at least 7 days before issuing the advertisement.
(vii) Take Deposit Insurance:
- The company enters into an agreement with the Insurance Company 30 days before issuing the advertisement.
- Deposit Insurance is necessary only when the deposit amount plus interest exceeds ₹ 20,000.
(viii) File a copy of the advertisement with the Registrar of Companies:
- A copy of the advertisement has to be filed with the Registrar of Companies.
- The company can publish the advertisement after 30 days of filing.
(ix) Advertisement to the Public:
- Advertisement is published for the public after 30 days of filing with the Registrar of Companies.
- The advertisement has to be published in one English newspaper and one regional newspaper having wide circulation in the state where the company’s registered office is located.
(x) Upload the advertisement on the company’s website:
After releasing the advertisement to the public, it is also necessary to upload it on the company’s website.
(xi) Collect application form and money:
The banker collects the application forms along with the deposit money on behalf of the company.
(xii) Issue Deposit Receipt:
The company has to issue a Deposit Receipt within 21 days from the date of receipt of money or realization of cheque.
(xiii) Create charge on assets:
- The company issuing secured deposits can create charges on its assets.
- This charge of assets should be created within 30 days of acceptance of the deposit.
(xiv) Make entries in Register of Deposits:
Secretary has to record the details of deposits in the Register of Deposits within the 7 days after issuing the Deposit Receipt.
The entries have to be verified by an authorized officer.
(xv) File Return of Deposits with Registrar of Companies:
- 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