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Justify the following statementWhile issuing secured deposits, company has to appoint Deposit Trustee.

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Question

Justify the following statement
While issuing secured deposits, company has to appoint Deposit Trustee.

Short/Brief Note
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Solution

Justification:
(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 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 about the security of depositors.
(3) If there is any default in repayment, trustees should organize a meeting of depositors.
(4) Thus, it is rightly justified that, while issuing secured deposits, the company has to appoint a Deposit Trustee.

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Terms and Conditions for Acceptance of Deposits
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Chapter 5: Deposits - Exercises [Page 92]

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