Q.Distinguish between deposits from members and deposits from the public.

Both are deposits under the same Chapter V of the Companies Act, 2013, but the source of the money changes every other requirement that follows from it.

Deposits from members and deposits from the public are both regulated under Chapter V of the Companies Act, 2013, but they differ on nearly every point of procedure, precisely because of who the money is coming from.

As to source, deposits from members (Section 73) come only from the company's own existing members, while deposits from the public (Section 76) come from the general public at large. As to which company may accept them, any company (other than one exempted under Section 73(1), such as a banking company or NBFC) may accept member deposits, whereas only an 'eligible company' — a public company meeting a prescribed net-worth or turnover threshold — may accept public deposits. As to approval, member deposits need only an ordinary resolution in general meeting, while public deposits need a special resolution. As to the mode of invitation, a circular to members in Form DPT-1 suffices for member deposits, whereas public deposits need a circular or advertisement in Form DPT-1 published in both an English and a vernacular newspaper. As to credit rating, it is not compulsorily required for member deposits (unless the company also happens to be an eligible company), but is compulsory, and must be renewed every year, for public deposits. As to a trustee for depositors, one is required where deposits are secured for member deposits, but is always compulsory, under an executed deposit trust deed (Form DPT-2), for public deposits. Both categories, however, require the company to maintain a Deposit Repayment Reserve Account on the identical 20%-by-30th-April basis, and both require a filing with the Registrar of Companies before the invitation is made. …

The most common error is stating the two categories differ only in 'who receives the money,' without going on to explain that the SOURCE of the money is exactly what drives every procedural difference — resolution type, credit rating, and trustee requirement all trace back to it. Students …