Chapter 5 Deposits

As per the provisions of the Companies Act, 2013 and relevant rules thereunder, an eligible company is not permitted to accept from public or renew the same deposits (whether secured or unsecured) which is repayable on demand or in less than_____ months. Further, the maximum period of acceptance of deposit cannot exceed _____months. But, for the purpose of meeting any of its short-term requirements of funds, a company may accept or renew deposits for repayment earlier than ____months subject to certain conditions.

• six, thirty-six, six

• three, twenty-four, three

• six, sixty, six

• three, sixty, six

Prem Limited decides to raise deposits of Rs. 20.00 lacs from its members. However, it proposes to secure such deposits partially by offering a security worth Rs.15.00 lacs. Which of the following options best describe such deposits:

• Fully secured deposits (except a small portion)

• Unsecured deposits

• Partially secured deposits

• These cannot be classified as deposits

Every company shall pay a penal rate of interest of___ per annum for the overdue period in case of deposits, whether secured or unsecured, matured and claimed but remaining unpaid.

• 9%

• 14%

• 18%

• 24%

As per the provisions of the Companies Act, 2013 and relevant rules made thereunder, an eligible company can, in case the depositors so desire, may accept deposits in joint names not exceeding _______. A joint deposit may Survivor, “First named or Survivor”, “Anyone or Survivor”. These clauses operate on _________.

• Three, maturity

• Five, accepting the deposits

• Two, maturity

• Five , maturity

What is the maximum tenure for which a co. can accept or renew deposits from its members as well as public?

• 36 months

• 63 months

• 48 months

• 24 months

Answer explanation

A company is not permitted to accept or renew deposits for a period exceeding 36 months.

A Limited Company is accepting deposits of various tenures from its members from time to time. The current Register of Deposits, maintained at its registered office is complete. State the mandatory minimum period for which it should be preserved in good order.

• Four years from the financial year in which the latest entry is made in the Register.

• Eight years from the financial year in which the latest entry is made in the Register.

• Six years from the financial year in which the latest entry is made in the Register.

• Ten years from the latest date of entry.

Bhumi Real Estate Developers Limited has accepted deposits from its members. There is no default in repayment of such deposits on their maturity. The statutory amount to be deposited by the company on or before 30th April of each year in a specified account opened with its bankers, till the deposits are fully repaid is:

• Not less than 50% of the amount of its deposits maturing during the following financial year.

• Not less than 20% of the amount of its deposits maturing during the following financial year.

• Not less than 30% of the amount of its deposits maturing during the following financial year.

• Not less than 10% of the amount of its deposits maturing during the following financial year.

Answer explanation

As per section 73(2)(c) the co. is required to deposit, on or before 30th April of each year, at least 20% of the amt. of its deposits maturing during the following financial year.

A reserve A/c that shall not be used by the co. for any purpose other than repayment of deposits is called:

• Debenture redemption reserve account

• Deposit repayment reserve account

• Capital redemption reserve account

• Free reserve account

Answer explanation

According to Sec 73, the amount deposited in deposit repayment reserve account shall not be

utilized for any purpose other than for the repayment of deposits

Dream World Entertainment Limited, has accepted deposits worth Rs.50.00 lacs from public on 1st April 2019 for a period of 24 months i.e., repayment of deposit would be made on 31st March 2021. The rate of interest payable on such deposits is 9% p.a. One of the depositors Mr. Aman requested the company on 1st June 2020 for premature repayment of his deposit of Rs. 6.00 lacs along with interest. Advise the company in the said matter.

• The company can make premature repayment of deposits only with an intention to reduce the total amount of deposits to bring it within permissible limits. Hence, in the given case, the company cannot repay the deposit before the actual maturity.

• The company can prematurely repay the deposit along with interest @9% p.a. for the period of 12 months (from 1st April 2019 to 31st March 2020).

• The company can prematurely repay the deposit along with interest @8% p.a. for the period of 12 months (from 1st April 2019 to 31st March 2020).

• The company can prematurely repay the deposit along with interest @8% p.a. for the period of 14 months (from 1st April 2019 to 31st May 2020).

Answer explanation

As per rule 15 of the Companies (acceptance of deposits) rules, 2014 after the expiry of 6 months but before the actual date of maturity, if depositor request for premature repayment, the interest rate payable shall be "original rate - 1%" for the period for which deposit has actually run.

Ruchita wants to renew her deposit of Rs.5.00 lakh with Kewal Constructions Limited before the expiry of original period for availing higher rate of interest. The fresh period, for which Ruchita is required to renew her deposit to be eligible for the higher rate shall be:

• One and a half times the unexpired period of original deposit.

• Double the unexpired period of original deposit.

• Six months more in addition to the unexpired period of deposit.

• Longer than the unexpired period of deposit.

Answer explanation

In case a depositor desires to avail higher rate of interest by renewing the deposit before its actual maturity date, the company shall pay him the higher rate of interest only if the deposit is renewed for a period longer than the unexpired period of deposit.