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Question
Justify the following statement:
There is a limit or restriction on the amount that a company can collect as deposits.
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Solution
- Private Company: A private company can accept deposits from its members up to 100% of the aggregate of its paid-up share capital, free reserves, and securities premium account.
- Public Company: A public company can accept deposits from its members up to 35% of the aggregate of its paid-up share capital, free reserves, and securities premium account.
- Eligible Company: An eligible public company (which meets the prescribed net worth and turnover conditions) can accept deposits from the public up to 25% of the aggregate of its paid-up share capital, free reserves, and securities premium account.
It can also accept deposits from its members up to 10% of the aggregate of its paid-up share capital, free reserves, and securities premium account. - Government Company: A government company can accept deposits up to 35% of the aggregate of its paid-up share capital, free reserves, and securities premium account.
Thus, there are specific limits and restrictions on the amount of deposits a company can collect to ensure financial stability, transparency, and protection of stakeholders’ interests.
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