Companies Act Section 76 — Acceptance of deposits from public by certain companies
CHAPTER V ACCEPTANCE OF DEPOSITS BY COMPANIES
Commercial / Corporate
Summary
Sub-section (1) allows a public company that has the net worth or turnover prescribed by the government to accept deposits from people who are not its members, as long as it follows the requirements of sub-section (2) of section 73 and any rules the Central Government makes in consultation with the Reserve Bank of India.
The first proviso to sub-section (1) says that such a company must get a rating from a recognised credit rating agency before inviting deposits from the public. This rating must cover the company's net worth, liquidity, and ability to pay deposits on time, and it must be shared with the public to show adequate safety. The rating must be obtained every year for as long as the deposits remain outstanding.
The second proviso to sub-section (1) says that if a company accepts secured deposits from the public, it must, within thirty days of accepting them, create a charge on its assets for an amount at least equal to the deposits accepted, in favour of the deposit holders, following the prescribed rules.
Sub-section (2) says that all other provisions of this Chapter apply to deposits accepted under this section, with the necessary changes.
Official Text
(1) Notwithstanding anything contained in section 73, a public company, having such net worth or turnover as may be prescribed, may accept deposits from persons other than its members subject to compliance with the requirements provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe:
Provided that such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits:
Provided further that every company accepting secured deposits from the public shall within thirty days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of the deposit holders in accordance with such rules as may be prescribed.
(2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of deposits from public under this section. 1