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Acceptance of deposits by companies Chapter 5 of the new act is to be followed for inviting, accepting or renewing deposits. As per section 73 of the new act NBFCs or any other banking co pany are not covered by the provisions relating to acceptance of deposits and they will be governed !nder r!les iss!ed by "B#. F!rther a co pany cannot accept deposits fro person other than e bers and approval of shareholder will be re$!ired for the acceptance of deposits. And even for accepting deposits fro e bers following condition sho!ld be satisfied% #. #ss!ance of a circ!lar to its e bers incl!ding therein a state ent showing the financial positions of the co pany, the credit rating obtained, the total no. of depositors and the a o!nt d!e towards the deposits in respect of any previo!s deposits accepted by the co pany and s!ch other partic!lars ay be prescribed in s!ch for and anner& ##. filing a copy of the circ!lar along with s!ch state ent with the "egistrar within thirty days before the date of iss!e of the circ!lar& ###. 'epositing s!ch s! which shall not be less than fifteen per cent. of the a o!nt of its deposits at!ring d!ring a financial year and the financial year ne(t following, and kept in a sched!led bank in a separate bank acco!nt to be called as deposit repay ent reserve acco!nt& #). providing s!ch deposit ins!rance in s!ch anner and to s!ch e(tent as ay be prescribed& ). certifying that the co pany has not co itted any defa!lt in the repay ent of deposits accepted either before or after the co ence ent of this Act or pay ent of interest on s!ch deposits& and )#. providing sec!rity, if any for the d!e repay ent of the a o!nt of deposit or the interest thereon incl!ding the creation of s!ch charge on the property or assets of the co pany. *here the co pany does not sec!re the aforesaid deposits or sec!res s!ch deposits partially, then, the deposits shall be ter ed as +!nsec!red deposits, and shall be $!oted in every circ!lar, for advertise ent or in any doc! ent related to invitation or acceptance of deposits. -very deposit accepted by a co pany !nder section 73./0 shall be repaid with interest in accordance with the ter s and conditions of the agree ent. *here a co pany fails to repay the deposit or part thereof or any any interest thereon !nder section 73.30, the depositor concerned ay apply to the trib!nal for an order directing the co pany to pay the s! d!e or for any loss or da age inc!rred by hi as a res!lt of s!ch non pay ent and for s!ch other orders as the trib!nal ay dee fit.
As per the Act, no advertise ent is re$!ired to be p!blished for invitation or acceptance of deposits. F!rther there is no provision for suo-moto action by trib!nal for directions to repay the deposits or interest thereon in case of defa!lt in s!ch repay ents. 1he concept of s all depositors has been dispensed with. 1he provisions of 2ectio3n 54AAA of the co panies act, 5356 aking the defa!lt !nder the provisions for acceptance or repay ent of deposits as cogni7able offence, has been done away with.
Loan and investment by company in the new act certain new provisions has been added few odified and so e deleted fro section 37/a of the old act which is corresponding to section 546 of the new act. 1hese provisions are% Now the co pany is re$!ired to disclose the e bers in the financial state ents the f!ll partic!lars of loans given, invest ent ade or g!arantee given or sec!rity provided and the p!rpose for which the loan or g!arantee or sec!rity is proposed to be !tili7ed by the recipient of the loan or g!arantee or sec!rity. Now on the stock Broker, 2!b8broker, 2hare 1ransfer Agent, Banker to iss!e, registrar to an iss!e, 9erchant Banker, :nderwriter, portfolio 9anager, invest ent Advisor or any #nter ediary Associated with capital arket shall take inter corporate loans and deposits e(ceeding the li its which will be prescribed. No co pany which has defa!lted in pay ent of any deposit accepted before the co ence ent of this Act or pay ent of interest shall give any loan or provide any g!arantee or sec!rity or ake any ac$!isition till the defa!lt is s!bsisting. A NBFC whose principal b!siness is ac$!isition of shares and sec!rities, shall be e(e pt fro the provisions of this section, in respect of s!bscription or ac$!isition of sec!rities. A new provision has been inserted which states that a Co pany shall !nless otherwise prescribed, cannot ake invest ent thro!gh ore than two layers of invest ent co panies. ;owever, s!ch provision shall not effect% 5. A co pany fro ac$!iring any other Co pany incorporated in a co!ntry o!tside #ndia if s!ch other co pany has invest ent s!bsidiaries beyond two layers as per the laws of s!ch co!ntry /. A s!bsidiary Co pany fro having any invest ent s!bsidiary for the p!rposes of eeting the re$!ire ents !nder any law or !nder any r!le reg!lation fra ed !nder any law for the ti e being in force. Now the section for invest ent and loan is not only li ited to inter corporate loans and invest ent b!t its scope has been e(tended to incl!de loans and invest ent to any person also. odified ones are as follows%
9eeting the de and of the #nd!stry, now loan !nder this section shall not be provided at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year <overn ent 2ec!rity closest to the tenor of the loan =artic!lar of "egister of #nvest ent to be aintained shall be prescribed by way of r!les. 1he p!nish ent for contravention of provision related to loan and invest ent by the co pany incl!ding that of "egister of invest ents and loans for which seprate penalty has been provided !nder the old law has been increased. #n case of defa!lt, the Co pany shall be p!nishable with fine which shall not be less than twenty five tho!sand r!pees b!t which ay e(tend to one lakh r!pees and every officer of the Co pany who is in defa!lt shall be p!nishable with i prison ent for a ter which ay e(tend to two years or with fine which shall not be less than twenty five tho!sand r!pees b!t which ay e(tend to one lakh r!pees or with both. 1he relief provided fro i prison ent in case of f!ll or part pay ent of loan has been withdrawn. 1he section does not prescribes any p!nish ent for the parties who are knowingly party to the defa!lt *hile considering the li its for aking invest ent, providing loan, providing g!arantee or sec!rity, the a o!nt for which invest ent has been ade or loan, g!arantee or sec!rity already provided, will not be considered, as opposed to co panies act, 5356, where the a o!nt loan, invest ent, g!arantee already provided is also considered. ention provisions are odified and the withdrawn provisions are as follows%
1he above
=ower of the Board to give inter corporate g!arantee witho!t being previo!sly a!thori7ed by a special resol!tion !nder so e circ! stances has been withdrawn. 1he e(e ption given to following fro this section !nder the old law has been dispensed with% 5. private co pany& /. ac$!isition by holding co pany by way of s!bscription, p!rchase or otherwise the sec!rities of its wholly owned s!bsidiary has been dispensed with& 3. loan ade by holding co pany to its wholly owned s!bsidiary& >. to any g!arantee given or sec!rity provided by a holding co pany in respect of any loan ade its wholly owned s!bsidiary.