Chapter 5 Deposits Solutions

Group ‘A’

Group ‘B’

(a) Private Company

(5) 100% aggregate of paid-up share capital + free reserves

(b) Deposit Trust Deed

(2) Signed at least 7 days before 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 June every year

1C. Write a word or a term or a phrase that can substitute each of the following statements.

1D. State whether the following statements are true or false.

1E. Find the odd one.

1F. Complete the sentences.

1G. 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) ……………………

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 30 June

1H. Answer in one sentence.

1I. Correct the underlined word/s and rewrite the following sentences.

1J. Arrange in proper order.

2. Explain the following terms/concepts:

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

1. Apple Company Ltd. plans to raise funds through Public Deposits. Its net worth is ₹ 10 Crores.

Question (a).
Can they accept deposits from the public?
Answer:
No, the company cannot accept deposits from the public as its net worth is less than ₹ 100 crores.

Question (b).
Can they accept deposits that mature after 4 years?
Answer:
No, the deposit can be accepted or renewed which mature after four years.

Question (c).
Within what period should the company issue deposit Receipts to its depositors?
Answer:
The company has to issue a Deposit Receipt to the depositors within twenty-one (21) days from the date of receipt of money or realization of the cheque.

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

Question (a).
Can the company accept deposits in joint names?
Answer:
Yes, the company can accept deposits in joint names of depositors. But there should not be more than 3 names.

Question (b).
Can the company accept deposits from it’s members?
Answer:
Yes, the company can accept fresh deposits only if the amount of such deposits together with the previous deposits does not exceed 10% of the aggregate of paid-up share capital and free reserves.

Question (c).
Can the company issue secure deposits?
Answer:
Yes, the company can issue a secured deposit only if it is clear which should be clearly mentioned in the circular or advertisement inviting deposits.

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

Question (a).
Does the company need to get shareholders’ approval for accepting deposits?
Answer:
Yes, the company has to seek the shareholder’s approval for accepting deposits by passing a special resolution.

Question (b).
Does the company have to appoint a Deposit Trustee?
Answer:
Yes, the company has to appoint a Deposit Trustee as it is issuing secured deposits.

Question (c).
Within what period should the company create a charge on it’s assets?
Answer:
A Company can create a charge on its tangible assets within 30 days of acceptance.

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

Question (a).
Can the company accept deposits from the public?
Answer:
No, it cannot accept deposits from the public because it is a private company.

Question (b).
Which document should the company issue to invite deposits?
Answer:
A Private Ltd. Company can issue circulars to invite deposits.

Question (c).
What is the maximum period for which they can accept deposits?
Answer:
The maximum period for accepting deposits is 36 months.

4. Answer in brief.

The amount of deposits that different types of companies can collect by way of deposits is as follows:
Amount of Deposit:
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, a certain class of Private Companies as specified by the Companies Act can accept deposits of 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 deposits from members if the amount of such deposits together with the previous deposits exceeds 25% of the aggregate of the paid-up share capital and free reserves of the company.

c) Eligible Public Company:
An ‘Eligible Company’, i.e. company eligible to accept deposits from the public under section 76(1) of Companies Act, 2013, can accept deposits up to 25% of paid-up capital, free reserves, and securities premium account from the ic.

In addition, it can accept deposits up to 10% of the gate of paid-up share capital, free reserves, and securities premium account from members Rule 3(4) of Companies (Acceptance of Deposits) Rules, 2014.

(d) Government Company:
A Government company is eligible to accept deposits under section 76 of the Companies Act, 2013.
It can accept deposits up to 35% of paid-up capital, free reserves, and securities premium account From the ic.

Contents of circular or advertisement:

(ii) No demand deposit:
The company cannot accept or renew deposits repayable on demand.

(iii) Secured or Unsecured Deposit:

(iv) Application Form:

(v) Joint names:
The company can accept deposits in joint names of depositors. But there should not be more than three names.

5. Justify the following statements.

6. Answer the following questions.

(i) Private Company:

(ii) Public Company (other than an eligible company):

(iii) Eligible Public Company:

(iv) Government Company:

(b) Filing of Circular or Advertisement with Registrar of Companies:
A company has to file a copy of a circular or advertisement signed by all directors with the Registrar of Companies.

(c) Issue of Circular or Advertisement:

(d) Validity of Circular or Advertisement:
The validity of 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.