REGISTERED No. D. (D)-72
The Gazette of India
EXTRAORDINARY
PART II—Section 3—Sub-section (i)
PUBLISHED BY AUTHORITY
No. 30] NEW DELHI, MONDAY, FEBRUARY 3, 1975/MAGHA 14, 1896
Separate paging is given to this Part in order that it may be filed
as a separate compilation
MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS
(Department of Company Affairs)
NOTIFICATION
New Delhi, the 3rd February 1975
G.S.R. 43(E)—In exercise of the powers conferred by section 58A, read with section 642, of the Companies Act, 1956 (1 of 1956). the Central Government, in consultation with the Reserve Bank of India, hereby makes the following rules, namely:—
1. Short title, commencement and application.—(1) These rules may be tailed the Companies (Acceptance of Deposits) Rules, 1975.
(2) They shall come into force on the date of their publication in the Official Gazette.
(3) They shall apply to such companies as are not banking companies and are not also financial companies.
2. Definitions.—In these rules, unless the context otherwise requires,—
(a) "Act" means the Companies Act, 1956 (1 of 1956)
(b) "deposit" means 'any deposit of money with, and includes any amount borrowed by, a company, but does not include—
(i) any amount received from the Central Government or a State Government, or any amount received from any other source ' and whose repayment is guaranteed by the Central Government or a State Government, or any amount received from a local authority or a foreign Government or any other foreign citizen, authority or person;
(197)
198 THE GAZETTE OF INDIA EXTRAORDINARY [PART 11-^(ii) any amount received as a loan from any banking company or from the State Bank of India or any of its subsidiary bants or from a banking institution notified by the Central Government under section 51 of tile Banking Regulation Act, 1949 (10 of 1949), or a corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or from a co-opera- tive bank as defined in clause (bii) of Section 2 of the Reserve Bank of Undia Act, 1934 (2 of 1934);
(iii) any amount received ; as a loan from Ihc Industrial Finance Corporation of India established under the Industrial Finance Corporation Act, 1948 (13 of 1948), or from a State Financial Corporation established under the State Financial Corporation Act, 1951 (63 of 1951), or from the Shipping Development Fund Committee constituted under section 1* of tho Merchant Shipping ACIA 1958 (44 of 1958) or from the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or from the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964), or from an Electricity Board constituted und^r the Electricity (Supply) Act, 1948 (54 of 1948) or from (he Life Insurance Corporation of India constituted under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956), or from/tho Rehabilitation Industries Corporation of India Limited or the State Trading Corporation of India Limited or the Minerals and Metals Trading Corporation of India Limited or the Rural Electrification Cor- poration Limited or the Agricultural Finance Corporation Limited or the Industrial Reconstruction Corporation of India Limited or the Industrial Credit 'and Investment Corporation of India Limited or tfic National 'Industrial Development Corporation of India Limited or the Tamil Nadu Industrial Investment Corporation limited or the State Industrial and Investment Corporation of Maharashtra Limited or from any other public financial institution which may be notified bv the Central Government in this beh'alf in consultation with the Reserve Bank of Tndia;
(iv) any amount received by a company from any other company; (v) any amount received from an employee of the company by way of security
deposit;
(vi) any amount received by way of security or as an advance from any purchasing agent, selling agent, or other agents in the course of, or Cor the purposes of, the business of the company or any advance received against orders for the supply of goods or properties or for the rendering of any service;
(vii) any amount received by way of subscriptions to any shares, stock, bonds or " debentures (such bonds or debentures being secured by a charge or lien on the assets of the company), pending the allotment of tho said snares, stock, bonds or debentures 'and any amount received by way of calls in advance on shares, in accordance with the articles of association of the company so long as such amount is not repayable to the members under the articles of association of the company: (viii) any amount received in trust or any Vtmount in transit; (c) "depositor" includes any person who has given w loan to a company; (d) "free reserves" shall include all sums shown or published in the balance-aheel or in the profit and loss account of th^ company as bein"; retained for any general or unspecified purpose 'and any statutory development rebate reserve created under sub-acctfon (2) of section 10 of th# Indian Incomd-tax Act, 1922 (11 of 1922), or under sub-section (3) of section 34 of the Income- tax Act, 1961 (43 of 1961), or anv res-rve for development allowances created under sub-section (3) of section 33A of the Income-tax Act, 1961 (43 of 1961) or under any other law for the time being in force.
3. Acceptance of deposits liy companies.—(1) On and from the commencement or these rules;—
(a) no company shall accept any deposit which is repayable on demand or on notice
or repayable after a period, or
(b) renew any such deposit accepted by it whether before or after such commence-
ment,
SEC. 3(i)] THE GAZETTE OF INDIA EXTRAORDINARY 19$Provided that a company may, for the purpose of meeting any of its short-term require- ments for funds accept or renew such deposits as are referred to in clause (i) of sub-sec- tion (2) for repayment earlier than six months from the date of deposit or renewal, as the case may be, subject to the condition that such deposits—
(i) shall not exceed tea per cent of the aggregate of the paid-up share capital and free reserves of the company; and
(ii) are repayable not earlier than three months from the date of such deposit or renewal thereof, as the case may be.
(2) On and from the commencement of these rules, no company slvall accept—
(i) any deposit against an unsecured debenture or any deposit from a shareholder (not being a deposit accepted by a private company from its shareholders) or any deposit guaranteed by any person who, at t'ac time of giving such guarantee is a director of the company, if the amount of 'any such deposit together with the 'amount of such other deposits of all or any of the kinds of deposits referred to in this clause and outstanding on the date of acceptance or renewal of such deposit, exceeds fifteen per cent [including any deposit accepted under the proviso to sub-rule ,(1) of rule 3] of the aggregate of the paid-up share capital and free reserves of the company:
Provided that for the purpose of calculation of 1'he amount of deposits outstanding on (he date of such acceptance or renewal, any deposit guaranteed by a person who, at the time of giving such guarantee, was the managing agent or secre- taries and treasurers of the company, and outstanding on such date shall be taken into account;
(ii) any other deposit, if the amount of such deposit together with the amount of such other deposit other than any of the deposits referred to in clause fi)l outstanding on the date of acceptance or renewal, exceeds twenty-five per cent, of the aggregate of the paid-up share capital and free reserve* of the company.
(3) If, immediately before the commencement of these rules, the aggregate amount of deposits, of the nature referred to in clause (i) of sub-rule (21, accepted by a company before such commencement, exceeds the limit specified in the said clause (i), th" company shill, on or before the 31st day of December, 1975, bring down the deposits to the limit aforesaid and for this purpose the company shall repay such deposits ai may be necessary.
Explanation 1.—For the purposes of this rule, "deposit" shall not include any loan secured by the creation of a mortgage, charge or pledge of any of the assets of the companv or purl thereof, if (he amount of such loan does not exceed twenty-five per cent, of the mirket value of Ihc assets which constitute the security for the loan:
Provided that if the Central Government is satisfied that a mortgage or a pledge created by a eommmv is not in the public interest it may declare that the loin creating such morlGii.ce or pledge shall be deemed to be a deposit for the purposes of this rule.
Explanation 2.— For the purpose of this rule, In arriving at the aggregate of the paid- up share cunital and free reserves of a company, there shall be deducted from the nscrcjrnte of the rtid-up share capital and free reserves as appearing in the latest audited bnlance-sheet of flic company, the amount of accumulated balance of loss, balance of deferred revenue expenditure and other int'ingible assets, if any. as disclosed in the said balance-sheet.
4. Form ami pfirficiilnrs of advertisements.—-(1) Every companv intending to invite oi- Decent denosirs from the public, other than deposits from its directors, shall Issue an ndvertisemcnf for ihe purpose in n leading Entriish Newsnaner and in one vernacular newspaper drcuiaHn;: in the State in which (he registered office of the company Is situate.
'
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(21 No rnmnany shall issue or allow any other person to issue or cause to be Issued on fls Ivhalf anv advertisement, invifine deposits, unless such ndvertisement Is issued on the an'horilv and in the name of (he Board of directors of the comnany and contains n reference to the conditions subiec' in which deposits shall be accepted bv the companv, th" dnte on which trf siirl Ronrd of rVrecfors has approved the text of advertisement, and the following informations, namely:- —
(a) nirne of the company;
3 oU
''kHiL UAZiali'ti OF INDIA iiXlJtAUKDiNAHY (.Pwh ii—
W me ousiness earned on by me company and us subsidiaries wun me details uX oranenes or units, u any;
(.dj brief particulars of the management of the company;
(.cj names, addresses and occupations of the directors;
W profits of trie company, beiore and after making provision for tax, lor liic three nnaneiai years lmmcaiateiy preceding tlic uaic of advertisement,
{$) dividends declared by the company in respect of the said years;
1&J particulars relating to the company as on the date 01 the latest audited balance- sheet of the company (which date shall also be slated,) under the following heads, namely:—
(ij paid-up share capital;
(ii) free reserves;
(iii) deposits;
(iv) any loan or advance obtained by the company and secured by a mortgage or pledge on the property of tnc company, including temporary loans as defined in section 293 of the Act;
(vj accumulated balance of loss, if any; and (vij an account vo£ the proposed utilisation ol the money to be received as deposits with details of projects, if any, to be financed out of the deposits.
I
(.3) An advertisement issued in accordance with this rule shall be valid upto the end of the financial year in which it is issued, and, a fresh advertisement shall be made, in each succeeding financial year, for the acceptance of deposits during that financial year.
(4) No advertisement shall be issued by or on behalf of a company unless, on or before the date of its issue, there has been delivered to the Registrar for registration a copy thereof signed by every person who is named therein as a director.
Explanation.—For the purpose of this rule, the dale of the issue of the newspaper in which the advertisement appears shall be tak.cn as the date of issue of the advertisement.
(5) Every change in the particulars contained in the advertisement of which a copy has been filed with the Registrar in accordance with sub-rule (4J shall also be notified to the Registrar within thirty days from the day on which such change occurs.
5. Form of application for deposits.—(1) On and from the commencement of these rules, no company shall accept, or renew any deposit unless an application is made by the intending depositor for the acceptnee of such deposit and such application contains a declaration by such person to the effect that ihe amount is not being deposited out of the funds acquired oy him by borrowing or accepting deposits from any other person.
(2) The application referred to in sub-rule (1) shall be made in the form supplied by the company and such form shall be accompanied by a statement by the company con taining all the particulars specified in sub-rule (2) of rule 4 and incorporating therein all changes in relation to such particulars up to the date on which the form is issued by the company.
6. Furnishing of receipt to depositors.—{[) Every company shall, on the acceptance oi renewal of a deposit, furnish to tho depositor or his agent, a receipt for the amount received by the company.
(2) The deposit receipt referred to in sub-rule (1) shall be signed by an officer of the Company duly authorised by the company ia this behalf and shall state (he date of deposit, the name and address of the depositor, the amount received by the company as deposit, the rate of interest payable thereon and the date on which the deposit is repay- able.
7. Registers of deposits.—(1) Every company accepting deposits shall keep at ils registered office one or more registers in which there shall be entered separately in the case of each depositor the following particulars, namely:—
SEC. 3(i)] THE GAZETTE OF INDIA EXTRAORDINARY a oI(c) duration of the deposit and the dato on which each deposit is repayable; (d) rate of interest;
(e) date or dates on which payment of interest will bo made;
(f) any other particulars relating to the deposit.
(2) The register or registers referred to in sub-rule (1) ahall be preserved hi good order for a period of not less than eight calendar years from the financial year in which the latest entry is made in the register.
I
8. General provisions regarding repayment of dcpoilte—-il) Where a company makes repayment of a deposit after the expiry of a period of six months from the date of such deposit but before the expiry of the period for which such deposit was accepted by the company, the rate of interest payable by the company on such deposit shall be reduced by one per cent, from the contracted rate and the company shall not pay in- terest at any rate higher than the rate as so reduced.
(2) In respect of any deposit referred to in column (1) of the Table below, no company shall pay interest at a rate exceeding the rate specified in the corresponding entry in column (2) of the said Table:—
TABLE
(2)
(1)
(i) if the deposit is repaid within a period of 14 days from the
Nil date of receipt
(ii> if the deposit is repaid after a period of 14 days but within
2% " period of 45 days from tho date of receipt.
(iii) if the deposit is repaid after a period of 45 days but with-
21% in a period of 90 days from the date of receipt.
(iv) if the deposit iis repaid after a period of 90 days but within
4% a period of six months from the date of receipt.
Provided that nothing in this rule shall apply to 3 deposit the terms and conditions of which provide for cairliex repayment of the deposit at the option of)the company and the deposit is repaid earlier in pursuance of such .deposit.
9. Power of Central Government to decide certain questions,—If any question arises as to 1 whether these rules are or are not applicable to a particular company, such question shall be decided by the Central Government in consultation with the Reserve Bank of iTndia.
10 Return of deposits to be filed with the Registrar.—Every company to which these rules apply, Jin each year, file with the Registrar, within thirty days from the last day of its financial year, a return containing—
(a) the amount of deposits brought forward from the previous financial year; (b) the deposits accepted or renewed dur'ng th; financial year; (c) the amount of deposits, repaid during the financial year and Ihe balance of de- posits outstanding at the end of the financial yeur;
(d) the tolal number of deposits, I repayable during the financial yMr whkln re- mains unclaimed and the aggregate amount of such unclaimed deposits, (e) the total number of deposits, repayable during the financial year, which, though claimed have not be-n repaid by the company during tha financial year and t'he aggregate amount of the deposits remaining so unpaid;
(f) the reasons in relation to each depositor, for
Provided that the furnishing of such reasons shall not be necestary unjfn
ss ^ a8 8r£ gale amount of deposits remaining unpaid at the end of the financial year exceeds rupees five lakhs;
(g) the steps which have been taken for the repayment of the deposits referred to in clause (f).
2p2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—Sue. a(i)]11. Penalty.—If a company or 'any other person contravenes any provision of these rules for which no punishment is provided in the Act, the company and every officer of the company who is in default or such other person shall.bo punishable with fine which may extend to five hundred rupees and where the contravention is a continuing one, with a further fine which may extend to fifty rupees for icvery day after the first during which the contravention continues,
12. Repeal and saving,—On the commencement of these rules, all rules, orders or directions in force in relation to any matter for w'nich provision is made in these rules shall stand repealed, except as respects things done or ommitted to* be done before such repeal.
[No. F. 5/4/72-CL-V]
P. B. MENON, Jt. Secy.
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