Chapter - 5 Deposits

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Q.1 A) Select the correct answer from the options given below and rewrite the statements.

1. Deposit is a type of ................................................. .

a) Owned capital

b) Short term loan

c) Long term loan

Ans: b) Short term

2. Eligible public company and Government Company can collect deposits from .........................

a) It’s employees

b) Public

c) RBI

Ans: b) Public

3. Private company can accept deposits from its member or Directors upto not more than ................... % of its aggregate of paid-up share Capital and free reserves.

a) 100

b) 35

c) 25

Ans: a) 100

4. A ......................................... Company can accept deposits from public not exceeding 35% of ts paid-up share Capital and free reserves.

a) Government

b) Private

c) Eligible Public

Ans: a) Government

5. Deposit can be accepted for a minimum of 6 months and maximum for ............. months.

a) 36

b) 3

c) 30

Ans: 36

6. Company issues ........................................... to invite its members to subscribe for its deposit scheme.

a) Advertisement

b) Circular

c) Newspaper

Ans: Circular

7. Company can issue circular or advertisement for inviting deposits after ............. days of filing it with Registrar of Companies.

a) 30

b) 21

c) 7

Ans: 30

8. Company has to appoint ..................................... to protect the interest of depositors.

a) Debenture Trustees

b) Deposit Trustees

c) Credit Rating Agency

Ans: b) Deposit Trustees

9. Charge on assets is to be created when a company issues ........................

a) Unsecured deposit

b) Unsecured Debenture

c) Secured deposit

Ans: Secured deposit

10. Deposit Receipt is issued within ............. days of receipt of deposit.

a) 7

b) 30

c) 21

Ans: 21

11. For premature repayment of deposit, company deducts ........................ % of interest.

a)1

b) 18

c) 20

Ans: a) 1

12. Return of deposit must be filed every year on or before ........................

a) 30th June

b) 31st March

c) 30th April

Ans: a) 30th June

B) Match the pairs

Group A	Group B
a) Private Company	1) 10% of aggregate of paid up share capital + free reserve
b) Deposit Trust Deed	2) Signed at least 7 days before issuing advertisement
c) Secured Deposit	3) Maximum 30 months
d) Tenure of deposit	4) Charge on tangible assets
e) Return of Deposit	5) 100% of aggregate of paid up share capital + free reserve
	6) File on or before 31^st March every year
	7) Signed 21 days after issuing advertisement
	8) Maximum 36 months
	9) Charge on intangible assets
	10) File on or before 30^th June every year

Ans:

Group A	Group B
a) Private Company	5) 100% of aggregate of paid up share capital + free reserve
b) Deposit Trust Deed	7) Signed 21 days after issuing advertisement
c) Secured Deposit	4) Charge on tangible assets
d) Tenure of deposit	8) Maximum 36 months
e) Return of Deposit	10) File on or before 30^th June every year

C) Write a word or a term or a phrase which can substitute each of the following statements.

1. A company which can accept deposits from its members, directors or their relatives not exceeding 100% of aggregate of paid up share capital and free reserves.

Ans: Private company

2. Company which can accept deposits from public up to 35% of its paid-up share capital and free reserves.

Ans: Government company

3. Minimum tenure of a deposit.

Ans: 6 months

4. Maximum tenure of a deposit.

Ans: 36 months

5. Period within which a company has to create a charge on its tangible assets.

Ans: Within 30 days of acceptance of deposit

6. Document issued by a company to invite its members to subscribe for its Deposits.

Ans: Circular

7. Agreement between company and Deposit Trustee.

Ans: Deposit Trust deed

8. Account that can be used only for repaying deposits.

Ans: Deposit Repayment Reserve Account

9. Time within which company has to issue deposit Receipt.

Ans: Within 21 days from the date of receipts of deposit

10. Book which contains details of deposits accepted or renewed.

Ans: Register of deposit

D) State whether the following statements are true or false.

1. Return of deposit must be filed every year on or before 31st March.

Ans: False

2. Eligible public company can collect deposits from its members.

Ans: True

3. Government company can collect deposits from its members.

Ans: False

4. A private company can collect deposits from public.

Ans: False

5. Deposit can be accepted for a maximum of 36 months.

Ans: True

6. Eligible public company can collect deposits from public not exceeding 35% of its paid up share capital and free reserves.

Ans: False

7. For secured deposits, company has to create a charge on its tangible assets.

Ans: True

8. Deposit Receipt is issued within 21 days of receipt of deposits.

Ans: True

9. Company appoints Credit Rating Agency to protect the interest of depositors.

Ans: False

10. Deposit Trust Deed is an agreement between company and Deposit Trustee.

Ans: True

E) Find the odd one.

1. Private company, Eligible public company, Government company.

Ans: Private company

2. Deposit Trustee, Deposit Trust Deed, Special Resolution.

Ans: Special Resolution

3. Appointment of Deposit Trustee, Appointment of Registrar of companies, Appointment of Credit Rating Agency.

Ans: Appointment of Registrar of company

F) Complete the sentences.

1. Deposit is a type of .......................... term loan.

Ans: Short terms

2. Eligible Public company and Govt. Company can accept deposits from ......................... .

Ans: Public

3. To collect deposits from public, Eligible public company must have a net worth of not

less than ` .......................... .

Ans: Rs: 100 Crores

4. A Government company can accept deposits from public not exceeding .......................... .

Ans: 35% is paid up of share capital as a free Reserve

5. Deposits can be accepted or renewed for a period not less than 6 months and not more

than .......................... .

Ans: 36 months

6. Company cannot accept or renew deposits repayable on .......................... .

Ans: Demand

7. Premature repayment of deposits can be done by a company but not before .........................

Ans: 3 months

8. To invite the public to subscribe for its deposits, a company issues .......................... .

Ans: Advertisement

9. Agency which gives ratings of the deposits of a company is called .......................... .

Ans: Credit Rating Agency

10. Account which is used only for repaying deposits is called .......................... .

Ans: Deposit Repayment Reserve Account

G) Select the correct option from the bracket

Group A	Group B
a) Government Company	1. .......................
b) ..............................	2 Deposits from members
c) 36 months	3. .......................
d) ..............................	4. Charge on tangible assets
e) Return of deposit	5. .......................

(File on or before 30th June, Private Company, Secured deposits, Deposits from public, Maximum tenure of deposits.)

Ans:

Group A	Group B
a) Government Company	1. Deposits from public
b) Private Company	2 Deposits from members
c) 36 months	3. Maximum tenure of deposits
d) Secured deposits	4. Charge on tangible assets
e) Return of deposit	5. File on or before 30th June.

H) Answer in one sentence.

1. Which companies can accept deposits from public ?

Ans: Eligible Public companies and government companies can accept deposits from public.

2. What is the maximum deposit the Government company can collect ?

Ans: Government company can accept deposits from public not exceeding 35% of its paid-up share capital and free reserve of the company.

3. What is the tenure of a deposit ?

Ans: the tenure of a deposit should be minimum 6 months but cannot be more than 36 months.

4. Who are Deposit Trustees ?

Ans: Depositors Trustees are the trustees who protect the interest of the depositor in case a company defaults in repaying the depositors.

5. What is Deposit Trust Deed?

Ans: Company signs a contract with the deposit trustees called as Trust Deed which contains the terms and conditions of the contract.

6. When does a company create charge on its tangible assets ?

Ans: company create charge on its tangible assets while issuing secured deposits.

7. Within what period should a company issue Deposit Receipt ?

Ans: Company has issue Deposit Receipt to the depositors within 21 days from date of receipts of money or realization of cheque.

8. When should a company file Return of Deposit ?

Ans: A company has to file return of deposit on or before the 30th June of every year

9. What is Deposit Repayment Reserve Account

Ans: Every company has to open Deposit repayment Reserve Account in a schedule bank to deposit an amount equal to 15% of the amount of deposit maturing during the current year and following financial year which can be used only for repaying deposit.

10. What is Register of Deposit?

Ans: A company has to maintain a separate register for Deposit accepted or reward at its registered office which contains the details of the deposit alone with the details of the depositors.

I) Correct the underlined word/s and rewrite the following sentences.

1. Government Company can accept deposit from members.

Ans: Government Company can accept deposit from Public.

2. Company issues advertisement to invite its members for subscribing to its deposits.

Ans: Company issues Circular to invite its members for subscribing to its deposits

3. Company appoints Credit Rating Agency to protect the interest of Depositors.

Ans: Company appoints Deposit Trustees to protect the interest of Depositors

4. Deposit Receipt is issued within seven days from date of receipt of deposits.

Ans: Deposit Receipt is issued within 21 days from date of receipt of deposits

5. Register of deposits is to be filed with the Registrar of companies on or before 30th June every year.

Ans: Return of deposits is to be filed with the Registrar of companies on or before 30th June every year.

6. Charge on assets is created when company issues unsecured deposit.

Ans: Charge on assets is created when company issues secured deposit

7. Minimum tenure of deposit is 36 months.

Ans: Minimum tenure of deposit is 6 months.

J. Arrange in proper order.

1. a. Appoint Deposit Trustee.

b. Hold General Meeting.

c. Create charge on assets.

Ans: b. Hold General Meeting,

a. Appoint Deposit Trustee,

c. Create charge on Assets

2. a. File Return of deposit

b. Issue Deposit Receipt

c. Issue advertisement.

Ans: c. Issue Advertisement,

b. Issue Deposit Receipt

a. File Return of deposit

3. a. Obtain Credit Rating.

b. Entries in Register of Deposits.

c. Issue Deposit Receipt.

Ans: a. Obtain Credit Rating,

c. Issue Deposit Receipt,

b. Entries in Register of Deposits.

Q.2 Explain the following terms / concepts.

1. Eligible Public Company

Ans: These companies can accept deposits from their members and also from the public. Eligible public company means a company having :

a) A Net worth of not less than ` 100 crores or,

b) Turnover of not less than ` 500 crores and which has obtained prior approval of its shareholders through special resolution for accepting public deposits.

c) These companies can accept deposits from their members and also from the public.

2. Tenure of Deposit

Ans: i) No deposit can be accepted or renewed which is to be repaid within a period of six months or more than thirty six months.

ii) In certain circumstances, a company may accept deposits repayable earlier than six months to meet its short-term needs.

iii) Such deposits must have a tenure of minimum three months and the amount of such deposits cannot be more than 10% of aggregate of the paid up share capital and free reserves of the company.

3. Secured Deposit

Ans: i) Secured deposit is deposit for which the company has to put up a tangible assets as a guarantee for the deposit.

ii) It provides security to the depositors. Depositors are secured if company fails to repay the deposit and its interest on its maturity certain assets of the company will be sold and amount of deposit will be paid.

iii) A company accept secure deposit from the public within 30 days of acceptance, has to create charge on its tangible assets for an amount not less than the amount of deposit accepted.

4. Deposit Trustee

Ans:

i) Eligible companies and public companies have to appoint One or more Deposit Trustees issuing secured deposits.

ii) The Trustee protect the interest of the depositor in case a company defaults in repaying the depositors.

iii) Company signs a contract with the Deposit Trustees Called as Trust Deed.

iv) The Deposit Trustees on its own or on the request of one tenth of depositors, can call a meeting of all depositors when a company defaults in repaying deposits.

5. Charge on tangible assets

Ans:

i) A Company accepting secured deposits from public, within thirty days of acceptance, has to create a charge on its tangible assets for an amount not less than the amount of deposits accepted.

ii) The minimum amount of security should be equal to the amount not covered by Deposit Insurance. The Security is created in favour of the Deposit trustees.

6. Deposit Insurance

Ans:

i) Eligible Public Company, while accepting deposits from Public, have to take the insurance of deposits which provides security to the depositors. If the amount plus interest on it is up to Rs. 20,000.

ii) A company needs to take Deposit Insurance at least 30 days before issue of circular or advertisement. If the amount of Deposit plus interest on it is up to ` 20,000, insurance is to be taken.

7. Deposit Repayment Reserve Account

Ans:

i) Every company accepting deposits, has to open in a scheduled Bank, a Deposit Repayment Reserve Account.

ii) Every year, on or before 30th April, company has to deposit an amount not less than 20% of the amount of deposits maturing during the current year.

iii) This account can be used only for repaying deposit

8. Credit Rating

Ans:

i) The credit rating means analyzing a company's net worth, assets and its liquidity, current liabilities, its repayment capacities, financial strength, etc.

ii) The Credit Rating Agency considers the net worth of the company, liquidity position, ability to repay deposits on time etc. and accordingly gives a rating.

iii) Rating shall be obtained every year during the tenure of the deposits

iv) Every company has to get credit rating of its deposits and include the ratings in the circular or advertisement.

9. Deposit Receipt

Ans:

i) Company has to issue Deposit Receipt to the depositors within twenty one (21) days from date of receipt of money or realization of cheque.

ii) The receipt has to be signed by the officer duly authorized by the Board of Directors.

iii) The Receipt contains the name and address of the depositor, amount of deposit, rate of interest payable and date on which it is repayable.

10. Return of Deposit

Ans:

I) Return of deposit means submitting all the details to company Registrar with regards to the deposit which is accepted from public.

ii) Details like name of the depositors, amount of deposit, tenure, repayment or date of maturity. Etc. to be filled up in a prescribed format suggested by the Registrar of companies.

iii) A company has to file, on or before 30th June every year, with the Registrar of Companies a Return of Deposit.

iv) The Return gives details of deposits with the company as on 31st March of that year.

Q.3 Study the following case/situation and express your opinion.

1. Apple Company Ltd. plans to raise funds through Public Deposits. It’s net worth is ` 10 Crores.

a. Can they accept deposits from the public ?

Ans: No, Apple Company Ltd. cannot raise the fund through Public Deposits as their net worth is only Rs. 10 Crores. As per the rule, any public company having a net worth of Rs. 100 crores or more can accept deposits from the public.

b. Can they accept deposits which matures after 4 years.

Ans: No, As the maximum period for which a deposit can be accepts is 36 months, they cannot accepts deposit which matures after 4 year.

c. Within what period should the company issue deposit Receipt to it’s depositors ?

Ans: Company has to issue Deposit Receipts to the depositors within 21 days from date of receipts of money or realization of cheque.

2. ABC Company Ltd. is an eligible Public Company as per the Companies Act, 2013 with reference to accepting Public Deposits.

a. Can the company accept deposits in joint names ?

Ans: Yes, ABC company Ltd. can accepts the deposit in joint names but there should not be more than three names.

b. Can the company accept deposits from it’s members ?

Ans: Yes, ABC Company Ltd. is an eligible public company as per the company Act, 2013 and thus authorized to accept fresh deposits from its members only if the amount of such deposits together with the previous deposits does not exceeds 10% of the aggregate of paid up share capital share capital and free reserves.

c. Can the company issue secured deposits ?

Ans: Yes, ABC Company Ltd. can issued the secured deposits by creating charges over their tangible assets and by appointing deposit trustees for the same.

3. Apple Company Ltd. is an eligible Public Company. It plans to raise secured deposits from the public. Please advice its Board on the following.

a. Does the company need to get shareholders approval for accepting deposits ?

Ans: Yes, Apple Company Ltd. needs to get the shareholders' approval for accepting deposits by passing a special resolution for accepting deposits. Company holds a General Meeting of the shareholders to seek their approval.

b. Does the company have to appoint a Debenture Trustee ?

Ans: Yes, Company has to appoint a Deposit Trustee as it is issuing secured deposits.

c. Within what period should the company create a charge on it’s assets ?

Ans: The Company has to create a charge on its tangible assets within 30 days of acceptance of deposits, The charges is created for an amount not less than the amount of deposit accepted.

4. SUN Pvt. Ltd. company wants to raise funds through deposits.

a. Can the company accept deposits from the public ?

Ans: No, SUN Pvt. Ltd. being a private company cannot raise capital from the public. A Private Company can accept deposits from its members or Directors or Relatives of Directors.

b. Which document should the company issue to invite deposits ?

Ans: Sun Pvt. Ltd. Company should issue circular or statement in lieu of advertisement to invite deposits.

c. What is the maximum period for which they can accept deposits ?

Ans: It can accept the deposit for maximum period of 36 months.

Q.4 Answer in brief.

1. State the amount of deposits that different types of companies can collect by way of deposits.

Ans:

A) Private Company : A Private Company can accept deposits from its members or Directors or Relatives of Directors not more than 100 percent of its aggregate of paid up share capital and free reserves. However, certain class of Private Companies as specified by the Companies Act, can accept deposits more than 100 percent of its aggregate of paid up share capital and free reserves.

B) Public Company other than Eligible Company : These Companies cannot accept fresh deposit from members if the amount of such deposits together with the previous deposits exceeds 35% of the aggregate of the paid up share capital and free reserves of the company.

C) Eligible Public Company :

From the Member: Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 10% of aggregate of paid up share capital and free Reserves.

From Public: Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 25% of aggregate of paid up share capital and free Reserves.

D) Government Company can accept deposits from public not exceeding 35% of the paid up share capital and free reserves of the company.

2. State the contents of circular or Advertisement for Deposit.

Ans: If a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, company has to issue an advertisement.

a) Contents of circular or advertisement :

i) Statement about the financial position of the company

ii) The portion of secured and unsecured deposit of fresh issue

iii) Credit rating obtained from a Credit Rating Agency (only for eligible public company)

iv) Details of the scheme

v) Name of Deposit Trustees

vi) Amount due towards deposits of any previous deposits accepted by company

b) Filing of circular or advertisement with Registrar of Companies :

Company has to file a copy of circular or Advertisement signed by all directors with the Registrar of Companies.

c) Issue of circular or Advertisement :

For inviting the public, company has to publish the advertisement in one English newspaper and one vernacular newspaper having wide circulation in the state where the company’s registered office is located.

d) Validity of circular or advertisement :

The circular or advertisement is valid for 6 months from the end of the financial year in which it was issued or the date on which the Annual General Meeting was held, whichever is earlier.

3. State the provisions regarding appointment of Deposit Trustee.

Ans:

i) Eligible companies and public companies appoint one or more Deposit Trustees while issuing secured deposit.

ii) They protect the interest of the depositor, in case a company defaults in repaying the deposit amount and interest.

iii) Company signs a contract with with the Deposit Trustees called as Trust Deed. It contains the terms and conditions of the contract.

iv) The deed has to be signed at least 7 days before issuing the circular or advertisement.

v) The deposit trustees on his own or on the request of one tenth of depositors can call a meeting of all depositors when a company defaults in repaying deposits,

4. State any four terms and conditions regarding acceptance of Deposit.

Ans: TERMS AND CONDITIONS FOR ACCEPTANCE OF DEPOSITS :

1. Amount of Deposit :

However, certain class of Private Companies as specified by the Companies Act, can accept deposits more than 100 percent of its aggregate of paid up share capital and free reserves.

C) Eligible Public Company :

D) Government Company can accept deposits from public not exceeding 35% of the paid up share capital and free reserves of the company.

2. Period / Tenure of Deposit :

No deposit can be accepted or renewed which is to be repaid within a period of six months or more than thirty six months.

In certain circumstances, a company may accept deposits repayable earlier than six months to meet its short term needs. Such deposits must have a tenure of minimum three months and the amount of such deposits cannot be more than 10% of aggregate of the paid up share capital and free reserves of the company. Under certain circumstances, on the request of the depositor, company makes premature repayment of deposits. Company may also renew its deposits with the same terms of issue and it will be considered as fresh deposits.

3. No demand deposit : Company cannot accept or renew deposits repayable on demand.

4. Secured or Unsecured Deposit : A company can accept secured or unsecured deposit which should be clearly mentioned in the circular or advertisement inviting deposits. If a company offers secured deposits, it has to create a charge on its tangible assets within 30 days of acceptance of deposits.

5. Application Form : A company has to provide application form. It should contain a declaration by the applicant that the deposit he is making is not made out of any money borrowed by him from another person.

6. Joint names : Company can accept deposits in joint names of depositors. But there should not be more than 3 names.

7. Nomination : Every depositor at any time, has the right to nominate any person as nominee in the event of death of the depositor

Q.5 Justify the following statements.

1. All companies cannot accept deposits from public.

Ans:

i) Deposit is a type of short term loan taken by company from its own members and from Public.

ii) It is one of the cheapest mode of raising fund by accepting deposit but can be risky too in case of default of repaying deposit.

iii) There are certain regulations regarding accepting deposit from the Public.

iv)Only eligible company or government company can accept deposit from public.

v) Private company and public company (other eligible company) can accepting deposit from its members and its Directors but not from public.

vi) Thus, All companies cannot accept deposit from public.

2. There is a limit or restriction on the amount that a company can collect as Deposits.

Ans:

i) A Private Company can accept deposits from its members or Directors or Relatives of Directors not more than 100 percent of its aggregate of paid up share capital and free reserves.

ii) Public Company other than Eligible Company cannot accept fresh deposit from members if the amount of such deposits together with the previous deposits exceeds 35% of the aggregate of the paid up share capital and free reserves of the company.

iii) Eligible Public Company cannot accept fresh deposits from its members if the amount of such deposits together with the previous deposits exceeds 10% of aggregate of paid up share capital and free Reserves and 25% of aggregate of paid up share capital and free Reserves in case of deposits from public.

iv) Government Company can accept deposits from public not exceeding 35% of the paid up share capital and free reserves of the company.

v) Hence, There is a limit or restriction on the amount that a company can collect as Deposits.

3. Company has to fulfill certain provisions related to issue of circular or advertisement.

Ans:

If a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, company has to issue an advertisement.

a) Contents of circular or advertisement:

i) Statement about the financial position of the company

ii) The portion of secured and unsecured deposit of fresh issue

iii) Credit rating obtained from a Credit Rating Agency (only for eligible public company)

iv) Details of the scheme v) Name of Deposit Trustees vi) Amount due towards deposits of any previous deposits accepted by company

b) Filing of circular or advertisement with Registrar of Companies :

Company has to file a copy of circular or Advertisement signed by all directors with the Registrar of Companies.

c) Issue of circular or Advertisement:

Only after 30 days of filing a copy of circular or Advertisement with the Registrar of Companies, the company can issue the circular or advertisement. Company can send the circular to the members through registered post, speed post or as email. For inviting the public, company has to publish the advertisement in one English newspaper and one vernacular newspaper having wide circulation in the state where the company’s registered office is located.

d) Validity of circular or advertisement :

The circular or advertisement is valid for 6 months from the end of the financial year in which it was issued or the date on which the Annual General Meeting was held, whichever is earlier.

4. While issuing secured deposits, company has to appoint Deposit Trustee.

Ans:

i) Eligibility companies and public company have to be appoint one or more Deposit Trustees while issuing secured debenture.

ii)The Trustees protect the interest of the depositor in case of a company defaults in repaying the depositor.

iii) Company signs a contract with the deposit Trustees called as Trust Deed.

iv) The Deposit Trustees on its own or on the request of one tenth of depositor, can call a meeting of all depositor when a company defaults in repaying deposit.

v) Hence, company has to appoint Deposit Trustees.

5. Companies have to create a charge on their tangible assets while issuing secured deposits.

Ans: i) Deposits are issued by the company as a means to rise funds for the company.

ii) Safeguarding the money of the depositor is the utmost priority while issuing the secured deposit and by creating charges on their tangible assets makes depositor money safe and secured.

iii) If a company offers secured deposit, it has to create a charge on its tangible assets.

iv) The charges has to be created within 30 days of accepting of deposits. Hence companies have to create a charges on their tangible assets while issuing secured deposit.

6. Company issuing deposit must open Deposit Repayment Reserve Account

Ans: .Company issuing deposit must open deposit Repayment Reserve Account due to following reasons:

i) As per the Indian Companies Act 2013, Every company accepting deposit, had to open a Deposit Repayment Reserve Account in a schedule bank.

ii) The account can be used only for repaying deposit.

iii) Company has to deposit an amount not less then 15% of the amount of deposit maturing during the current year and following financial years.

iv) Every company accepting deposit has to deposit the above mentioned amount every year on or before 30th April in Deposit Repayment Reserve Account.

Q.6 Answer the following questions.

1. Explain the type of companies that can raise deposits along with the maximum amount they can raise as deposits.

Ans:

A) Private Company : A Private Company can accept deposits from its members or Directors or Relatives of Directors not more than 100 percent of its aggregate of paid up share capital and free reserves. However, certain class of Private Companies as specified by the Companies Act, can accept deposits more than 100 percent of its aggregate of paid up share capital and free reserves.

B) Public Company other than Eligible Company : These Companies cannot accept fresh deposit from members if the amount of such deposits together with the previous deposits exceeds 35% of the aggregate of the paid up share capital and free reserves of the company.

C) Eligible Public Company : From Public Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 25% of aggregate of paid up share capital and free Reserves. From the Member: Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 10% of aggregate of paid up share capital and free Reserves.

D) Government Company : Government Company can accept deposits from public not exceeding 35% of the paid up share capital and free reserves of the company.

2. Explain the provisions related to circular or advertisement for inviting deposits.

Ans: If a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, company has to issue an advertisement.

a) Contents of circular or advertisement :

i) Statement about the financial position of the company

ii) The portion of secured and unsecured deposit of fresh issue

iii) Credit rating obtained from a Credit Rating Agency (only for eligible public company)

iv) Details of the scheme

v) Name of Deposit Trustees

vi) Amount due towards deposits of any previous deposits accepted by company

b) Filing of circular or advertisement with Registrar of Companies :

Company has to file a copy of circular or Advertisement signed by all directors with the Registrar of Companies.

c) Issue of circular or Advertisement : Only after 30 days of filing a copy of circular or Advertisement with the Registrar of Companies, the company can issue the circular or advertisement.

Company can send the circular to the members through registered post, speed post or as email.

d) Validity of circular or advertisement : The circular or advertisement is valid for 6 months from the end of the financial year in which it was issued or the date on which the Annual General Meeting was held, whichever is earlier.

Chapter- 5 Deposite

Chapter - 5 Deposits

_______________________________________________________________________

Q.1 A) Select the correct answer from the options given below and rewrite the statements.

B) Match the pairs

C) Write a word or a term or a phrase which can substitute each of the following statements.

D) State whether the following statements are true or false.

G) Select the correct option from the bracket

H) Answer in one sentence.

I) Correct the underlined word/s and rewrite the following sentences.

J. Arrange in proper order.

Q.2 Explain the following terms / concepts.

Q.3 Study the following case/situation and express your opinion.

Q.4 Answer in brief.

Q.5 Justify the following statements.

Q.6 Answer the following questions.

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