Section 73 — Acceptance of Deposits from Members (Procedure)
## Section 73(2) — Conditions for Accepting Deposits from Members
Every company (other than those excluded) may accept deposits from its members by passing an Ordinary Resolution (OR) in General Meeting and complying with the following:
### Step 1 — Pass OR in General Meeting
Authorisation of members through Ordinary Resolution is mandatory.
### Step 2 — Issue Circular to Members
The circular must disclose:
Statement of company's financial position (latest)
Credit rating obtained
Total number of depositors and amount of deposits previously accepted that remain outstanding
Particulars of default in repayment, if any (along with the date of cure)
Authorisation by majority of directors (signed by majority of directors)
### Step 3 — Modes of Issue
The circular may be sent by:
Registered Post with acknowledgement due
Speed Post
E-mail (electronic mode)
Publication in English newspaper (in English language, having wide circulation)
Publication in Vernacular newspaper (in the State where RO is situated)
Display on the company's website
### Step 4 — Attachment with Circular
Statutory Auditor's certificate stating that the company has NOT committed any default in repayment of deposits / interest thereon — if a default existed and has been made good, 5 years must have lapsed since cure.
### Step 5 — File Circular with ROC
File the circular in Form DPT-1 with ROC at least 30 days before issue to members.
Apply the protective rules: deposit ≥ 20% of next year's maturities into DRR, create charge for secured deposits, etc.
## Maximum Limit of Deposits from Members (Rule 3)
Type of Company
Maximum Amount (% of PUSC + FR + Securities Premium)
Private Company (specified IFSC / Start-up up to 10 years / Specified Private Co. — meeting Rule 3(3) conditions)
100% of (PUSC + FR + SP) — no upper cap
Other Private Companies
100% of (PUSC + FR + SP)
Non-eligible Public Companies
35% of (PUSC + FR + SP)
Eligible Public Companies (from members)
10% of (PUSC + FR + SP)
File particulars of deposits accepted in Form DPT-3 with ROC annually (by 30th June).
Worked example
### Example 1
Q. ABC Pvt. Ltd. has paid-up share capital ₹50 lakh, free reserves ₹30 lakh and securities premium ₹20 lakh. What is the maximum amount it can accept as deposits from members?
A. PUSC + FR + SP = ₹50 + ₹30 + ₹20 = ₹100 lakh. As a private company satisfying Rule 3(3) conditions (no other body corporate has invested, no borrowings exceed twice PUSC or ₹50 cr), the cap is 100% of ₹100 lakh = ₹1 crore.
### Example 2
Q. A non-eligible public company has PUSC ₹2 crore, FR ₹1 crore. It accepts ₹1.5 crore from its members. Is this in order?
A. Maximum allowed = 35% × (₹2 cr + ₹1 cr) = 35% × ₹3 cr = ₹1.05 crore. Accepting ₹1.5 crore breaches the Rule 3 cap. The excess must be returned and the company is liable to penalty under Section 73 / 76A.
### Example 3
Q. PQR Ltd. defaulted in repaying deposits in FY 2022–23 but cured the default in March 2024. Can it issue a circular for fresh deposits in May 2026?
A. No. The proviso to Section 73(2) read with Rule 4(2) requires 5 years to have elapsed since the day of making good the default. Only March 2029 onwards can the company issue a fresh circular.
⚠️ Common exam mistakes
Writing 'Special Resolution' instead of Ordinary Resolution for accepting deposits from members under Sec. 73(2). SR is needed only for public deposits under Sec. 76.
Forgetting that the deposit circular (Form DPT-1) is valid only for 6 months from closure of FY or until date of next AGM, whichever is earlier.
Confusing the 10% members-cap (eligible public co.) with the 35% cap (non-eligible public co.). These apply to different companies, not stages.
Missing the 5-year cooling-off requirement after curing a past default — students often write '1 year' or 'no waiting period'.
Bare-Act text Section 73(2) read with Rules 3, 4 of Companies (Acceptance of Deposits) Rules, 2014 · Companies Act, 2013 · click to expand
Section 73(2): A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to fulfilment of the following conditions, namely:— (a) issuance of a circular to its members…; (b) filing a copy of the circular along with such statement with the Registrar within 30 days before the date of issue of the circular…; (c) depositing, on or before the 30th day of April each year, such sum which shall not be less than 20% of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account called deposit repayment reserve account; (d) [omitted — deposit insurance]; (e) certifying that the company has not committed any default in the repayment of deposits…; (f) providing security, if any, for the due repayment of the amount of deposit or the interest thereon…