When a company invites secured deposits, it must appoint a Deposit Trustee to protect depositor interests.
## Appointment & Deed
Every company inviting secured deposits shall appoint one or more trustees for depositors.
The company shall execute a Deposit Trust Deed in Form DPT-2at least 7 days BEFORE issuing the circular/advertisement.
## Duties / Functions of the Deposit Trustee
1. Protect the interest of the depositors — including creating securities within the stipulated time.
2. Redress grievances of depositors effectively.
## Who CANNOT be Appointed as Trustee (Disqualifications)
The proposed trustee must NOT be:
(a) A director, KMP, officer or employee of the company, OR of its holding/subsidiary/associate company, OR a depositor in the company;
(b) Indebted to the company, or its subsidiary, or its holding/associate company, or a subsidiary of such holding company.
The rationale is independence: a trustee cannot be inside the corporate group or financially beholden to it; otherwise the protective role becomes illusory.
## Quick Recap of the Timeline
Action
Timing
Execute Deposit Trust Deed (Form DPT-2)
At least 7 days BEFORE issuing circular/advertisement
Issue circular/advertisement
Per Rule 4 (filing 30 days before with ROC)
Create security (Rule 6)
Within 30 days FROM acceptance
Worked example
### Example 1
Example 1 — Trust Deed Timing: Company plans to issue circular on 20 August 2025. The Deposit Trust Deed in Form DPT-2 must be executed by 13 August 2025 (at least 7 days earlier).
### Example 2
Example 2 — Disqualification: Mr A is an employee of the subsidiary of XYZ Ltd. XYZ proposes to appoint him as Deposit Trustee. He is disqualified under Rule 7 — being an employee of a subsidiary places him within the prohibited group.
### Example 3
Example 3 — Indebtedness: A consultancy firm owes ₹2 lakh to XYZ Ltd. It is therefore indebted to the company and cannot serve as XYZ's deposit trustee.
⚠️ Common exam mistakes
Believing the trust deed can be executed AFTER the circular — it must be at least 7 days BEFORE.
Appointing an officer of a holding/subsidiary/associate company as trustee — the disqualification extends to the full group, not just the parent company.
Overlooking the indebtedness disqualification — even small dues bar the appointment.
Confusing this 7-day pre-circular trust deed window with the 30-day post-acceptance security creation window.
Bare-Act text Rule 7 · Companies (Acceptance of Deposits) Rules, 2014 · click to expand
Rule 7 — Appointment of trustee for depositors: (1) No company referred to in sub-section (2) of section 73 or any eligible company inviting secured deposits shall issue a circular or advertisement inviting secured deposits unless the company has appointed one or more trustees for depositors for creating security for the deposits: Provided that a written consent shall be obtained from the trustee for depositors before their appointment... (2) A trust deed in Form DPT-2 shall be executed by the company issuing deposits or inviting deposits, at least seven days before issuing the circular or circular in the form of advertisement. (3) No person including a company that is in the business of providing trusteeship services shall be appointed as a trustee for the depositors, if the proposed trustee— (a) is a director, key managerial personnel or any other officer or an employee of the company or of its holding, subsidiary or associate company or a depositor in the company; (b) is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company...