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Explain the following term/concept. Secured Deposit

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Question

Explain the following term/concept.

Secured Deposit

Explain
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Solution

  1. A company can accept secured or unsecured deposits, which should be clearly mentioned in every circular, form, advertisement, or in any document related to the invitation or acceptance of deposits.
  2. If the company intends to issue Secured Deposits, it shall create security in favour of trustees within 30 days of acceptance of deposits. Trustees should ensure the security of depositors. If there is any default in repayment, trustees should organise a meeting of depositors – Rules 6 to 8 of Companies (Acceptance of Deposits) Rules, 2014.
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Terms and Conditions for Acceptance of Deposits
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Chapter 5: Deposits - Exercises [Page 91]
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