## Secured Deposits — Creation of Charge
Where a company opts to issue secured deposits, it must:
1. Create a charge on tangible assets of the company (excluding intangible assets).
2. The value of charged assets must be sufficient to cover the deposit amount + interest.
3. The charge must be created in favour of a Deposit Trustee appointed for the depositors.
4. The charge must be filed with ROC in Form CHG-1.
## Appointment of Deposit Trustee
Before issuing the circular/advertisement, the company must:
- Appoint one or more Deposit Trustees by the company;
- Obtain written consent of the Trustee;
- Execute a Deposit Trust Deed in Form DPT-2 at least 7 days before issuing the circular to members / advertisement to public;
- Mention the name of the Deposit Trustee in the circular.
## Disqualifications of a Deposit Trustee (Rule 7)
A person CANNOT be appointed Deposit Trustee if:
| Disqualification | Explanation |
|---|---|
| Director / KMP / Officer / Employee of the company | Conflict of interest |
| Material guarantor for repayment of deposits / interest | Conflict — represents company side |
| Beneficially holds shares ≥ amount specified | Insider stake |
| Indebted to the company / subsidiary / holding / associate of company | Cannot impartially enforce |
| Has a material pecuniary relationship with the company | Independence compromised |
| Relative of any promoter / director / KMP of the company | Independence compromised |
| Engaged in any business with the company | Independence compromised |
## Removal of Deposit Trustee
A Deposit Trustee can be removed only with consent of all directors present at the Board Meeting, AND such meeting must include at least one Independent Director (where applicable). This high threshold protects depositors from arbitrary removal.
## Duties of Deposit Trustee — Calling Meetings of Depositors
The Trustee must call a meeting of all deposit holders:
1. On requisition — when depositors holding ≥ 1/10th (in value) of outstanding deposits so requisition; OR
2. Suo motu — on the happening of an event that, in the opinion of the Trustee, requires depositors' attention (e.g., default, downgrade, distress).