Legal Regime Governing Acceptance Of Deposits By Miscellaneous Non-Banking Companies: A Comparison With Non-Banking Financial Companies
Ashar Hussain, B.B.A. LL.B., JGLS
The Companies Act of 2013 and the Companies (Acceptance of Deposit) Rules of 2014 regulate how a company may accept deposits from the general public. Under the Indian Company Law regime, only a Public Company is permitted to solicit deposits from the public, and such companies are generally subject to stringent oversight by the MCA and SEBI because Public Money is at stake. A company may obtain funds from the public in a variety of methods and formats, such as by issuing shares in their various forms (equity shares, preference shares, etc.), by issuing debt in its various forms (convertible and non-convertible debentures, etc.), etc.
The legal definition of "deposit" must be understood before proceeding to the article's meat and potatoes. Section 2(31) of the 2013 Companies Act defines "deposit" as any money received by a company in the form of a depositor loan or in any other form, excluding categories of quantities that may be prescribed in consultation with the Reserve Bank of India. The Companies Act of 2013 and the Companies (Acceptance of Deposit) Rules of 2014 allow a company to accept deposits both from the public and its members. To gain a fundamental understanding of deposits, we must examine the definition of "company" According to Kimball & Kimball, a corporation is an artificial person created or authorized by the law for a specific purpose. According to Lord Lindley, "a 'company' is a group of individuals who contribute money or money's worth to a common stock and use it for a common purpose. The contributed common stock is denominated in currency and serves as the company's capital. Members are those who contribute or to whom it belongs. His share is the proportion of capital to which he is entitled.
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