Section 76 of CA 2013 : Section 76: Acceptance Of Deposits From Public By Certain Companies

Explanation using Example

Imagine XYZ Tech, a public company with a substantial net worth, decides to raise funds for its new project. Instead of going for a bank loan, XYZ Tech opts to accept deposits from the general public, which is not part of its shareholders. To do so legally, XYZ Tech must comply with Section 76 of The Companies Act, 2013. This means they must follow the same procedures as they would for accepting deposits from members, as outlined in Section 73(2).

Before XYZ Tech can start accepting these deposits, it must first get a credit rating from a recognized agency. This rating, reflecting the company's financial health and ability to repay the deposits, must be disclosed to potential depositors. XYZ Tech must maintain this rating annually for as long as it has public deposits outstanding.

Furthermore, within thirty days of accepting deposits, XYZ Tech is also required to create a charge on its assets. This charge must be at least equal to the amount of deposits accepted, serving as a security for the deposit holders. This ensures that if XYZ Tech faces financial difficulties, the depositors have a claim on the company's assets.