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Microlesson · 5-min read

Ceiling Limits on Acceptance of Deposits [Rule 3(3)–(5)]

# Ceiling Limits on Acceptance of Deposits

The ceiling is calculated as a percentage of (Paid-up Share Capital + Free Reserves + Securities Premium).

## Master Table

Type of CompanyFrom MembersFrom Public
Eligible Company10%25%
Private Company (general)100%Not allowed
Specified IFSC Public Company100%Not allowed
Other than Eligible Company (Public)35%Not allowed
Government Eligible Company35%

## Carve-out: Private Companies NOT Subject to 100% Limit

The 100% ceiling does NOT apply to:

1. Start-up Private Company

  • For 10 years from the date of incorporation. (Note: the start-up exemption from circular conditions is 5 years; this 10-year window is specifically for the ceiling carve-out.)

2. Small Independent Private Company — ALL of:

  • (i) Not an associate or subsidiary of any other company;
  • (ii) Borrowings < lower of [2 × PUSC] or [₹50 crore];
  • (iii) No default in repayment of such borrowings subsisting at time of accepting deposits.

For these two categories, the Central Government will prescribe the specific limits (and the blanket 100% cap is set aside).

## Reading the Table

  • Eligible companies can tap the public pool but are tightly capped (25%).
  • General public companies (non-eligible) cannot tap the public — but can take 35% from members.
  • Private companies historically had 100% headroom on member deposits; the start-up and small-independent carve-outs prevent the cap from squeezing genuine growth-stage businesses.

Worked example

### Example 1

Example 1 — Eligible Co Public limit: XYZ Eligible Co Ltd has PUSC + Free Reserves + Securities Premium = ₹400 crore. Maximum public deposits = 25% × ₹400 cr = ₹100 crore. Maximum member deposits = 10% × ₹400 cr = ₹40 crore.

### Example 2

Example 2 — Non-eligible public company: A public company that does NOT meet eligibility thresholds (Net Worth < ₹100 cr & Turnover < ₹500 cr) cannot accept public deposits at all but can accept up to 35% of (PUSC + FR + SP) from its members.

### Example 3

Example 3 — Start-up carve-out: A 6-year-old private start-up wants to accept member deposits exceeding 100% of its (PUSC + FR + SP). Permitted? Yes, because the carve-out lasts 10 years from incorporation — subject to limits the CG prescribes.

⚠️ Common exam mistakes

  • Mixing 10% (eligible, members) with 25% (eligible, public).
  • Confusing the 5-year start-up exemption (from circular conditions in Section 73) with the 10-year carve-out from the ceiling limit.
  • Applying 'higher of' rather than 'lower of' in the small-independent test — it's always LOWER of [2×PUSC] or [₹50 cr].
  • Forgetting that IFSC public companies and private companies have a 100% cap, while general public companies (non-eligible) sit at 35%.
Bare-Act text Rule 3(3), 3(4), 3(5) · Companies (Acceptance of Deposits) Rules, 2014 · click to expand
Rule 3(3), 3(4), 3(5) of Companies (Acceptance of Deposits) Rules, 2014 prescribe maximum ceilings on the amount of deposits a company may accept, calculated on the aggregate of paid-up share capital, free reserves and securities premium account.
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