What is the difference between a deposit and an exempted deposit under the Companies Act, 2013?

A deposit is money accepted by a company that falls within the scope of the Companies (Acceptance of Deposits) Rules, 2014. An exempted deposit is a receipt specifically excluded from the definition of a deposit, such as money received from directors or (in certain cases) relatives, subject to prescribed conditions and declarations.

Can a company accept money from its directors without treating it as a deposit?

Yes. A company may accept money from a director out of the director’s own funds, provided the director submits a written declaration confirming the amount is not sourced from any borrowing, loan, or deposit taken from others. Such amounts are treated as exempted deposits.

Are amounts received from directors required to be reported anywhere?

Yes. Even though director funds qualify as exempted deposits, companies must disclose these amounts in the Director’s Report and the financial statements as per amended Deposit Rules.

Can a company accept loans or funds from relatives of directors?

Only private companies can accept funds from relatives of directors, subject to the relative providing a declaration that the amount is from their own funds and not borrowed. Public companies are not allowed to accept such amounts under this exemption.

What is the due date for filing Form DPT-3?

Form DPT-3 must be filed on or before 30 June every year, reporting details as on 31 March, and the information must be audited by the statutory auditor.

Deposits and Exempted Deposits Under the Companies Act 2013

Many companies are unclear about the distinction between a “deposit” and an “exempted deposit,” particularly for funds from directors, relatives, and members, creating compliance risk.

This confusion can lead to penalties, reporting errors, and regulatory scrutiny, even when the money was raised in good faith.

A clear understanding of what qualifies as a deposit, what is treated as an exempt deposit, and how to comply with forms such as DPT-1 and DPT-3 helps companies stay fully aligned with the law.

This guide explains the rules under the Companies (Acceptance of Deposits) Rules, 2014, including exemptions for director loans, transactions with relatives, and deposits from members.

Key Takeaways

Not all funds are deposits but every receipt must be classified correctly.
Amounts from directors, relatives, or members qualify as exempted deposits only when specific legal conditions and declarations are met.
Private companies have limited relaxations; public companies do not.
Loans from relatives of directors are allowed only for private companies and only from personal funds.
Form DPT-3 filing is mandatory for all companies, every year.
Deposits, exempted deposits, or both annual DPT-3 filing by 30 June is compulsory.

Deposits vs Exempted Deposits

Any company may accept money from a director at the time of receipt, provided it is from the director’s own funds. For this exemption, the director must give a written declaration that the amount is not sourced from any borrowings, loans, or deposits taken from others.

When these conditions are met, such amounts are treated as exempted deposits and are not considered “deposits” under Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014. However, after amendments, companies must disclose such amounts received from directors in the Board’s/Directors’ Report and in the financial statements.

Loans from Relatives of Directors

Under the Companies Act, 1956, private companies may accept loans from directors’ relatives. Initially, the Companies Act, 2013 and the original Deposit Rules did not allow companies to take such amounts from relatives.

With the Companies (Acceptance of Deposits) Second Amendment Rules, 2015 (effective 15 September 2015), private companies were permitted to accept amounts from relatives of their directors out of the relatives’ own funds. The relative must submit a declaration that the money is not given out of funds acquired by borrowing or by accepting loans or deposits from others, and such amounts are treated as exempted deposits.

This relaxation applies only to private companies. Public companies are still not allowed to accept amounts from relatives of their directors under this exemption.

Definition of “Relative” (for this Exemption)

For these provisions, “relative” follows the meaning under the Companies Act and related rules. It typically includes:

Husband and wife
Father (including step‑father)
Mother (including step‑mother)
Son (including step‑son) and son’s wife
Daughter and daughter’s husband
Brother (including step‑brother)
Sister (including step‑sister)

Deposits from Members: Limits and Conditions

Subject to the required resolution and the conditions in Section 73 and the Rules, a company may accept deposits from its members up to 25% of the aggregate of paid-up share capital and free reserves (and the securities premium account, post-amendment). This limit structure originally applied to both public and private companies, but later exemptions were granted to certain private companies.

Compliance Requirements for Accepting Deposits

Comparative Table: Private Companies with Exemptions vs Others

Requirement	Private Companies under Exemption Notification	Other Companies
Resolution	Ordinary Resolution	Ordinary Resolution
Form DPT-1	Not required	Mandatory. Issue circular, file with ROC, include auditor certificate.
Deposit Trust Deed (DPT-2)	Not required	Mandatory before issuing DPT-1 circular
Deposit Repayment Reserve	Not required	Mandatory – 15% (now 20% from 15 Aug 2018) of deposits maturing in current + next year
Security for Secured Deposits	Optional	Optional
Deposit Insurance	Not required	Earlier required; removed from 15 Aug 2018
Deposit Receipt	Within 21 days	Within 21 days
Deposit Register	Mandatory	Mandatory
Tenure of Deposits	6–36 months (with limited exceptions)	Same as private companies

Ensuring proper Annual ROC Filing is crucial, as deposit-related disclosures form part of these annual returns.

Special Provisions for IFSC Public Companies

A specified IFSC Public Company (licensed by SEBI/RBI/IRDAI in an approved SEZ) can accept up to:

100% of paid-up share capital + free reserves + securities premium

Compliance requirements include:

Annual filing of Form DPT-3
Filing due by 30 June every year
Information must be audited by the Statutory Auditor

Annual Filing Requirement – Form DPT-3

All companies whether accepting deposits, exempted deposits, or both must file:

Form DPT-3 every year
Due date: 30 June
Details as on 31 March
Must be audited by the Statutory Auditor

Failure to file can result in penalties and scrutiny. This process is an integral component of ongoing Company Secretarial Service.

Conclusion

Companies must carefully classify funds received from directors, relatives, and members to determine whether they qualify as deposits or exempted deposits. Regardless of classification, Form DPT-3 filing is mandatory every year, making compliance essential for all companies.