Question

Explain the following term/concept.

Depositor

Answer 1

1. A depositor is considered a loan creditor of the company, offering funds to help fulfil its working capital requirements. In return, the depositor receives regular interest at a fixed rate. These deposits are given without placing any charge on the company’s assets. The main concern of depositors is to receive their deposited amount back on the maturity date.
2. Depositors do not hold ownership in the company, so they have no right to vote in company meetings. They also do not have any role or say in the management of the company.