Regret Letter for Non-Acceptance of a Deposit, with Refund

Why a Company Sometimes Cannot Accept a Deposit Offered to It

Not every deposit application a company receives can lawfully be accepted. Chapter 5 studied the statutory ceilings the Companies (Acceptance of Deposits) Rules, 2014 fix on the aggregate a company may hold as deposits — for instance, a non-eligible company may accept deposits from members only up to 35% of its paid-up share capital, free reserves and securities premium account taken together. If accepting a particular application would push the company's total outstanding deposits beyond the applicable ceiling, or if the applicant's own documents are incomplete in a way the company cannot lawfully overlook (an unresolved KYC deficiency, for instance), or if the company has already closed the particular deposit scheme the applicant applied under, the Secretary has no choice but to decline the application — and to do so honestly and promptly, never by simply sitting on the applicant's money and hoping the problem resolves itself.

The Regret Letter Must Be Prompt, Honest, and Must Refund in Full

A regret letter is one of the more delicate letters a Secretary drafts, because it disappoints someone who came to the company in good faith — but the essentials remain the same as any other Secretarial letter: state the genuine reason clearly and without exaggeration or false excuse, apologise for any inconvenience caused, and — most importantly — enclose the full refund of the amount tendered, without any deduction, since the company never lawfully held the money as a deposit in the first place. Delaying the refund, or worse, retaining part of it, would itself be a serious lapse, regardless of how genuine the reason for non-acceptance was.

Specimen Letter — Regretting Non-Acceptance of a Deposit Application, with Refund

GODAVARI FOODS LIMITED

Registered Office: MIDC Area, Nashik – 422010

CIN: U15100MH2013PLC154321

Date: 18th September

To,

Mr. Nilesh Bhosale,

9, Panchavati Colony,

Nashik – 422003

Dear Sir,

Sub: Your Fixed Deposit application dated 5th September — regret and refund

We thank you for your application dated 5th September, offering to place a fixed deposit of Rs. 75,000 with our Company for a period of 24 months, and appreciate the confidence you have shown in us.

We regret to inform you that we are unable to accept your application, since accepting it would take our Company's aggregate outstanding deposits from members beyond the ceiling prescribed under the Companies (Acceptance of Deposits) Rules, 2014. We sincerely apologise for any inconvenience this may cause you.

We enclose our cheque No. 220145, drawn on Bank of Baroda, Nashik Industrial Area Branch, for the full amount of Rs. 75,000 tendered with your application, without any deduction. Kindly acknowledge receipt of this cheque.

We hope to be able to accept a fresh application from you should our deposit ceiling permit it at a future date, and we thank you once again for your interest in our Company.

Yours faithfully,

For Godavari Foods Limited

(Shalini Patwardhan)

Company Secretary …