Acceptances of deposits Definition of Deposits Eligibility to accept Deposits Applicability

A neighbour in your building tells you that a local company is offering a fixed return on money you park with it, better than your bank's fixed deposit. Your parents wonder whether to trust it. Every few years, companies that collect money like this disappear, and the depositors are left queuing outside an office. Parliament therefore treats a company that borrows from ordinary people very differently from a company that borrows from a bank. Chapter V of the Companies Act 2013 is the set of rules that decides who may collect deposits, from whom, and what happens when the company does not pay back.

In two minutes

A company may not invite, accept or renew deposits from the public except as Chapter V allows; it may take deposits from its members by an enabling resolution and a circular, and certain public companies may go beyond members, but any default brings heavy penalties and personal liability for fraud.

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