Report No. 143
3. Acceptance of deposits by Companies.-
(1) On and from the commencement of these rules,-
(a) no company shall accept any deposits 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 commencement, except where such deposit is repayable (after the expiry of six months but hot later than thirty-six months) from the date of acceptance or renewal of such deposit:
Provided that a company may for the purpose of meeting any of its short-term requirements for hinds, accept or renew, [such deposits as are referred to in Clause (i) of sub-rule (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 deposit
(i) shall not exceed ten 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:
Provided further that where a company has before the 1st day of April, 1978, accepted any deposit repayable after a period of more than thirty-six months, such deposits shall, unless renewed after the said date, be repaid in accordance with the terms of such deposits.
(c) no company shall invite or accept or renew any deposits in any form, on a rate of interest exceeding fourteen per cent. per annum;
(d) no company shall pay brokerage to any broker at a rate, exceeding one per cent. of the deposits for a period up to one year, one and half per cent. of the deposits for a period of more than one year but up to two years, and two per cent. of the deposits for a period exceeding two years, collected by or through such broker, and such payment shall be on one time basis.
(2) No company, other than a Government company shall accept
(i) any deposit against an unsecured debenture or any deposit from a share-holder (not being a deposit accepted by a private company from its share-holder) or any deposit guaranteed by any person who, at the 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 ten 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 the amount of deposits outstanding on the 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 secretaries 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 (i), outstanding on the date of acceptance or renewal exceeds twenty-five per cent. of the aggregate of the paid up share capital and free reserves of the company.
(2A) No Government company shall accept any deposit, if the amount of such deposit exceeds thirty-five per cent. including any deposit accepted under the proviso to sub-rule (1) of rule 3 of the aggregate of its, paid up share capital and free reserves.
(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 (2) accepted by a company before such commencement, exceeds the limit specified in the said clause (i), the company shall, on or before, the 31st day of March, 1978 bring down the deposits to the limit aforesaid and for this purpose the company shall repay such deposits, as may be necessary.
Explanation.-For the purpose of this rule in arriving at the aggregate of the paid up share capital and free reserves of a company there shall be deducted from the aggregate of the paid up share capital and free reserves as appearing in the latest audited balance sheet of the company the amount of accumulated balance of loss, balance of deferred revenue, expenditure and other intangible assets., if any, as disclosed in the said balance sheet.
"Government company" means a company as defined in section 617 of the Companies Act, 1956.
(4) On and from the 1st day of April, 1976, where a company has any outstanding loans which were excluded from deposits by virtue of Explanation I as it stated immediately before the said date, then such company shall before the first day of April, 1981, repay or bring such loan down to an amount which alongwith other outstanding deposits, is within the limits specified in this rule.