Proposal For Mandatory Insurance To Be Taken On Deposits

The Ministry of Corporate Affairs (MCA) has recently issued draft rules for the acceptance of deposits by companies. The draft Companies (Acceptance of Deposit) Rules 2013 (Rules) defines 'deposit' as the receipt of money, by a company, by way of a deposit or a loan or in any other form, with the exclusion of certain borrowings, such as from banks, the government and other companies and by way of subscription to securities. If these Rules are notified, they would replace the Companies (Acceptance of Deposit) Rules of 1975, which are currently in force.

The Rules permit both private and public companies to accept deposits, but mandate that deposits may be accepted only after the company passes a general resolution and issues a circular or an advertisement to its members or the public, setting out details of its financial position, its credit rating, the number of depositors and the history of deposits previously made with the company. A copy of the proposed