Think of Section 76 as the "public deposit" gateway for large public companies. While Section 73 lets companies take deposits from their own members (shareholders), Section 76 opens the door wider — allowing eligible public companies to collect deposits from complete strangers, i.e., the general public. This is a big deal because it's essentially allowing companies to borrow from anybody.
Not every public company can use this route. Only those meeting the prescribed net worth or turnover threshold (currently: net worth ≥ ₹100 crore OR turnover ≥ ₹500 crore) qualify. Once a company crosses that bar, it must still follow all the requirements of Section 73(2) — the same deposit rules that apply to member deposits (advertisement, deposit repayment reserve, insurance, etc.) — plus a few extra obligations specific to Section 76.
Those extra obligations are what examiners love to test. First, the company must get a credit rating from a recognised credit rating agency every year during the deposit tenure. The rating must cover the company's net worth, liquidity, and ability to repay on due date — and this rating must be disclosed to the public when inviting deposits. The idea: protect depositors by making risk visible. Second, if the company is accepting secured deposits (deposits backed by assets), it must create a charge on its assets within 30 days of accepting such deposits, for an amount not less than the deposits accepted — in favour of the deposit holders. This ensures depositors have a claim on the company's property if things go south. Remember: Section 76 is a non-obstante clause — it operates despite anything in Section 73, giving these large companies a special, broader privilege. This entire chapter's provisions apply mutatis mutandis (with necessary changes) to Section 76 deposits. Frequently tested as a 4–5 mark theory/application question.
📊 Worked example
Example 1 — Eligibility + Credit Rating Requirement
Rajesh & Co. Pvt. Ltd. has a turnover of ₹600 crore and wants to accept deposits from the public.
Step 1 — Check company type: Rajesh & Co. is a private limited company. Section 76 applies only to public companies.
Answer: Rajesh & Co. cannot accept public deposits under Section 76 — it must first convert to a public company.
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Example 2 — Secured Deposit Charge Creation
Sunrise Industries Ltd. (a public company with net worth ₹150 crore) accepts secured deposits from the public worth ₹40 crore on 1st April 2025.
Step 1 — Eligibility check: Net worth = ₹150 crore ≥ ₹100 crore. ✓ Public company. ✓ Section 76 applies.
Step 2 — Credit rating: The company must obtain a fresh credit rating from a recognised agency before inviting deposits and every year during the tenure.
Step 3 — Charge creation deadline: Secured deposits of ₹40 crore accepted on 1st April 2025.
Deadline = 1st April + 30 days = 30th April 2025.
Step 4 — Minimum charge amount: Charge must be created on assets worth ≥ ₹40 crore in favour of deposit holders.
Final Answer: Sunrise Industries must create a charge of at least ₹40 crore on its assets by 30th April 2025.
⚠️ Common exam mistakes
- Students think any public company can use Section 76. Wrong — only public companies meeting the prescribed net worth (₹100 crore) OR turnover (₹500 crore) threshold are eligible. Always check eligibility first.
- Confusing Section 73 and Section 76. Section 73 = deposits from members/shareholders. Section 76 = deposits from the general public (non-members). Don't mix them up in answers.
- Forgetting the annual credit rating requirement. Students mention credit rating once and move on — but the rating must be obtained every year during the entire deposit tenure, not just at the time of initial invitation.
- Missing the 30-day window for charge creation. For secured deposits, the charge must be created within 30 days of acceptance of deposits, not 30 days of the advertisement or board resolution. Date of acceptance is the trigger.
- Assuming Section 76 replaces Section 73 compliance. It doesn't — Section 76 companies must still comply with all Section 73(2) requirements (deposit repayment reserve of 20%, deposit insurance, etc.) in addition to Section 76's own conditions.**
📖 Bare Act text — Section 76, Companies Act 2013
(click to expand)
(1) 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 requirements provided in 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: Provided further that every company accepting secured deposits from the public shall within thirty days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of the deposit holders in accordance with such rules as may be prescribed. (2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of deposits from public under this section.
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