Question

State, with reason, whether the following statement is True or False.

A public company can receive deposits from the public to any extent.

Options

• True

• False

Answer 1

This statement is false,

A public company can receive deposits from the public to the extent of share capital prescribed by the Board of directors and approved by the government.

1. According to Provision of Section 58 (A) of the Companies Act, 1956 and Rules (2) of the companies Rules, 1975, the term ‘deposit’ means any deposit of money accepted and includes any amount borrowed by the company. The term ‘deposit’ however, does not include specific type of borrowings and security deposits.

 

2. Receiving the amount of deposits along with duly filled prescribed application by a company from the interested public in response to the advertisement given to invite deposits is called ‘acceptance of deposits’.

 

3. A public company can accept deposits from the public at large. The term ‘deposit’ is usually taken as ‘public deposit’ because the deposits are invited and accepted by the public company from the general public.