Maharashtra State BoardHSC Commerce 12th Board Exam
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Answer in brief.State any four terms and conditions regarding acceptance of Deposit. - Secretarial Practice

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Answer in Brief

Answer in brief.
State any four terms and conditions regarding acceptance of Deposit.

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Solution

TERMS AND CONDITIONS FOR ACCEPTANCE OF DEPOSITS:
1. 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, 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 25% of the aggregate of the paid-up share capital and free reserves of the company
C) Eligible Public Company :
i) From the Members:
Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 10% of the aggregate of paid-up share capital and free reserves.
ii) From Public: Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 25% of the aggregate of paid-up share capital and free reserves.
D) Government companies can accept deposits from the 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 a minimum of three months and the amount of such deposits cannot be more than 10% of the aggregate of the paid-up share capital and free reserves of the company. Under certain circumstances, on the request of the depositor, the company makes premature repayment of deposits. The 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 a secured or unsecured deposit which should be clearly mentioned in the circular or advertisement inviting deposits. If the 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 an 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 a nominee in the event of the death of the depositor
8. Circular or Advertisement: Of a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, the 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 the company

b) Filing of circular or advertisement with Registrar of Companies :
The company has to file a copy of the 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. The company can send the circular to the members through registered post, speed post, or as email. For inviting the public, the 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.

Concept: Terms and Conditions for Acceptance of Deposits
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