Background

Form DPT-1, relating to the Circular for Invitation of Deposits, was introduced under the Companies Act, 2013 to regulate the manner in which companies invite or accept deposits from members or the public. The provision was framed to ensure transparency and to protect investors from potential financial risks and misrepresentation. It requires companies to disclose complete and accurate financial information, terms of deposits, and associated risks before inviting deposits. The circular must be issued with the approval of the Board and filed with the Registrar to maintain accountability. This framework helps build investor confidence and ensures that companies follow a standardized and compliant process while raising funds through deposits.

Applicability

Any company except a Banking Company, NBFC, such companies as Central government may specify, specified IFSC public company

Compliance Requirements under the Act in Accordance with the Companies (Acceptance of Deposits) Rules, 2014

Before accepting deposits, the following conditions must be fulfilled:

Issuance of Circular [Section 73(2)(a)]

Content Requirements:

• • Financial position of the company
  • Credit rating obtained
  • Total number of depositors
  • Amount due towards deposits in respect of previous deposits
  • Other particulars in prescribed form and manner

Filing with Registrar [Section 73(2)(b)]

Copy of circular along with statement must be filed with Registrar within 30 days before the date of issue of the circular.

Deposit Repayment Reserve Account [Section 73(2)(c)]

On or before 30th April each year, deposit:

• • Not less than 20% of deposits maturing during the following financial year
  • In a scheduled bank
  • In a separate account called “Deposit Repayment Reserve Account”

Form DPT-1

For Companies Accepting Deposits from Members [Rule 4(1)]

Mode of Issue:

• By registered post with acknowledgement due, OR
• By speed post, OR
• By electronic mode

Form: DPT-1

First Proviso – In addition to issuance to all members, the circular may be published in:

• English newspaper (English language)
• Vernacular newspaper (vernacular language)
• Both having wide circulation in the State where registered office is situated

Second Proviso – Auditor’s Certificate:

(a) Where NO default committed: Certificate by statutory auditor in Form DPT-1 stating:

• Company has not committed default in repayment of deposits
• Company has not committed default in payment of interest on deposits
• Applies to deposits accepted before or after commencement of the Act

(b) Where default WAS committed: Certificate by statutory auditor in Form DPT-1 stating:

• Company had made good the default, AND
• 5 years have lapsed since the date of making good the default

For Eligible Companies [Rule 4(2)]

Form: Circular in the form of advertisement in DPT-1

Mandatory Publication in:

• English newspaper (English language) – countrywide circulation
• Vernacular newspaper (vernacular language) – wide circulation in State of registered office

Additional Requirement:

• Circular must be placed on company’s website (if any)
• Every company inviting deposits from public shall upload a copy of the circular on its website (if any).
• No company shall issue or allow any other person to issue circular/advertisement for deposits unless:

• Issued on the authority of the Board of Directors
• Issued in the name of the Board of Directors

• File not less than 30 days before the date of issue
• Copy of circular/advertisement must be delivered to Registrar for registration

Signatories: Signed by majority of directors as constituted when Board approved the circular, OR their duly authorized agents

Validity Period of Circular [Rule 4(6)]

Circular/advertisement remains valid until the earliest of:

(a) Expiry of 6 months from date of closure of financial year in which issued

(b) Date on which financial statements are laid before company in AGM

(c) Where AGM not held – latest day on which AGM should have been held per the Act

A fresh circular in Form DPT-1 shall be issued in each succeeding financial year for inviting deposits during that financial year.

Penalty & Punishment

For contravention of provisions of the Section 73 or non payment of deposit/interest, the company in addition to deposit/interest shall be punishable with fine not less than Rs. 1 crore or twice the amount of deposit which ever is less but may extend to Rs. 10 cr and every officer of company in default shall be punishable with imprisonment which may extend to 7 years and fine not less than Rs. 25 lacs which may extend to Rs. 2 cr and where officer does it knowingly, he would be liable under Section 447