# Eligible Public Companies & Acceptance of Public Deposits (Section 76)

## What is an 'Eligible Company'?

Only an 'Eligible Company' may accept deposits from the general public (not just members) under Section 76.

Definition: A public company having either:

Net Worth ≥ ₹100 crores, OR
Turnover ≥ ₹500 crores

(These are alternative thresholds — meeting either one is sufficient.)

## Resolution Requirements

Situation	Type of Resolution
Normal case	Special Resolution in general meeting
Deposits + Existing Debts ≤ (PUC + Reserves & Surplus) — i.e., within Sec 180(1)(c) limits	Ordinary Resolution sufficient

The special resolution must be filed with the Registrar of Companies (RoC).

## Additional Conditions under Section 76

In addition to the procedure under Section 73(2) (member deposits), an eligible company accepting public deposits must comply with:

### 1. Credit Rating

Obtain credit rating from a recognized credit rating agency
Rating must cover: net worth, liquidity, and ability to pay deposits on due date
Inform the public of the rating when inviting deposits
Renew rating annually and file with RoC in Form DPT-3
Rating must be at least 'investment grade' (or other specified rating)

### 2. Charge on Assets (Secured Deposits)

Create a charge on tangible assets within 30 days of acceptance of deposits
The charge secures repayment of principal + interest
Charge must be created in favour of the trustee for depositors

## Quick Comparison: Sec 73 vs Sec 76

Aspect	Sec 73 (Members)	Sec 76 (Public)
Who can accept	Any company (except exempted)	Only Eligible Companies
Source of deposits	Members only	Public + Members
Resolution	Ordinary	Special (or Ordinary if within Sec 180(1)(c))
Credit rating	Not mandatory	Mandatory & annually renewable
Trustee	Not required	Required for public deposits
Limits	35% of (PUSC+FR+SP)	Higher limits as per Rules

## Procedural Workflow for Section 76

1. Verify status as Eligible Company (NW ≥ ₹100 cr OR T/O ≥ ₹500 cr)

2. Pass Special Resolution in general meeting → file with RoC

3. Obtain Credit Rating (investment grade)

4. Issue Circular with credit rating disclosed

5. Open DRRA — deposit 20% of next FY's maturing deposits

6. Create charge on tangible assets within 30 days (for secured deposits)

7. Appoint trustee for depositors

8. Accept deposits & issue receipts within 21 days

9. Renew credit rating annually, file Form DPT-3 by 30th June

10. Repay deposits with interest on maturity

Worked example

### Example 1

Example 1: PQR Ltd is a public company with net worth ₹120 crore and turnover ₹200 crore. Is it an Eligible Company?

Solution: Yes — net worth (₹120 crore) ≥ ₹100 crore threshold. (Turnover threshold not met, but only ONE of the criteria needs to be satisfied.) PQR Ltd qualifies as an Eligible Company under Section 76.

### Example 2

Example 2: An eligible company wants to accept ₹50 crore as public deposits. Its existing borrowings + proposed deposits will not exceed (PUC + Reserves & Surplus). What kind of resolution is needed?

Solution: Since the company is within the Sec 180(1)(c) limits, an Ordinary Resolution is sufficient (as per the proviso). However, all other Sec 76 requirements (credit rating, trustee, charge creation, circular) still apply.

### Example 3

Example 3: An eligible company accepts secured public deposits on 1st April. By when must it create the charge on assets?

Solution: Within 30 days of acceptance — i.e., by 30th April. The charge must be created on tangible assets in favour of the trustee for depositors.

### Example 4

Example 4: What is the implication if an eligible company fails to renew its credit rating annually?

Solution: Failure to renew the credit rating annually is a contravention of Sec 76. The company will be subject to penalties under the Act. Additionally, it cannot continue inviting deposits without a valid investment-grade rating disclosed to depositors.

⚠️ Common exam mistakes

Treating any public company as eligible — only those meeting the net worth OR turnover threshold qualify.
Requiring BOTH net worth AND turnover thresholds — only ONE needs to be met.
Forgetting that even an eligible company must follow Sec 73(2) procedures + the additional Sec 76 requirements.
Missing the 30-day deadline for charge creation on secured deposits.
Treating credit rating as a one-time requirement — it must be renewed annually.
Confusing the eligibility threshold (₹100 cr net worth / ₹500 cr turnover) with the deposit acceptance limit (a separate percentage of PUSC+FR+SP).
Assuming ordinary resolution is always enough — special resolution is the default, with ordinary resolution only as an exception within Sec 180(1)(c) limits.

Bare-Act text Section 76 read with Rule 2(1)(e) and Rule 6 of Companies (Acceptance of Deposits) Rules, 2014 · Companies Act, 2013 · click to expand

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 provisions of 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.

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