Acceptance of Deposits and Registration of Charges

This set of vocabulary flashcards covers essential terms, forms, and conditions related to the acceptance of deposits and registration of charges under Indian Company Law as per the provided transcript.

Section 2 (31): Deposit

Includes any receipt of money by way of deposit or loan or in any other form by a company, but does NOT include categories of amount prescribed in consultation with the RBI.

Rule 2 (1) (c): Exclusions

Specific amounts not regarded as deposits, such as funds from Government, foreign sources, banks, financial institutions, Commercial Paper, Inter-corporate Deposits, and application money.

Eligible Company

A public company having a net worth of at least $100$ crores or a turnover of at least $500$ crores.

Depositor

Any member of the company who has made a deposit per Section 73 (2), or any person who has made a deposit with a public company per Section 76.

Form DPT-1

Circular or advertisement issued by a company to invite deposits.

Form DPT-2

The form used for a Deposit Trust Deed, which must be executed at least $7$ days before issuing the circular (DPT-1).

Form DPT-3

Return of Deposit; must be filed every year by $30^{\text{th}}$ June with information as on $31^{\text{st}}$ March, audited by a CA.

Deposit Repayment Reserve Account (DRRA)

A separate bank account in a scheduled bank where at least $20\%$ of the amount of deposits maturing during the following financial year must be deposited by $30^{\text{th}}$ April each year.

Convertible Note (Start-up Company)

A debt instrument of $25$ lakhs or more received in a single tranche, convertible into equity or repayable within a period not exceeding $10$ years from the date of issue.

Tenure of Deposits

The period for which a company can accept or renew deposits, ranging from a minimum of $6$ months to a maximum of $36$ months.

Very Short Term Deposits

Deposits for repayment earlier than $6$ months (minimum $3$ months) that do not exceed $10\%$ of the total of Paid-Up Share Capital, Free Reserves, and Securities Premium.

Premature Repayment of Deposits

Repayment requested after $6$ months but before maturity; the rate of interest payable shall be $1\%$ less than the original rate.

Penal Rate of Interest (Rule 17)

A rate of $18\% \text{ p.a.}$ for the overdue period if the company fails to repay deposits on maturity after they are claimed.

Section 2 (16): Charge

An interest or lien created on the property or assets of a company or any of its undertakings as security for repayment of a loan, and includes a mortgage.

Mortgage

A type of charge created on immovable property (like land and building) where possession remains with the borrower.

Hypothecation

A type of charge created on movable property (like cars or debtors) where possession remains with the borrower; requires registration of charge with ROC.

Pledge

A type of charge created on portable assets (like gold or shares) where possession of the asset is with the lender.

Form CHG-1

Application for registration of creation or modification of a charge, other than those involving debentures.

Form CHG-4

Form used for filing particulars for the satisfaction of a charge.

Rule 12: Deposit Receipt

A receipt furnished to the depositor within $21$ days from the date of receipt of money or realization of cheque.

Commercial Paper (CP)

A short-term unsecured Promissory Note issued by corporates in accordance with RBI guidelines.

Inter-corporate Deposits (ICD)

Any amount received by a company from any other company.