CHAPTER 5

Question 1

Eligible Public Company:

Answer 1

Eligible Public Company means a company having:
a) Net Worth of not less than ₹100 crores or,
b) Turnover of not less than ₹500 crores and,
c) which has obtained prior approval of its shareholders through special resolution for accepting public deposits.

Question 2

Contents of Circular or Advertisement:

Answer 2

1. Statement about the financial position of the company.
2. The portion of secured and unsecured deposit of fresh issue.
3. Credit Rating obtained from a credit rating agency. (Only for eligible public company)
4. Details of the scheme
5. Name of Deposit Trustees
6. Amount due towards previously accepted deposits.

Question 3

Provisions to be completed regarding circulars or advertisements:

Answer 3

• Filing:
  
  • File a copy of the circular or advertisement signed by all directors with the Registrar of Companies.
• Issuance:
  
  • Issue only after 30 days of filing.
  • Send circular to members via registered post, speed post, or email.
  • Publish advertisement in one English and one vernacular newspaper with wide circulation in the state where the company’s registered office is located.

Question 4

Deposit Tenure:

Answer 4

6 months to 36 months.

Question 5

Who are Circulars and Advertisement issued for?

Answer 5

Members are issued Circulars
Public is issued an advertisement

Question 6

Provisions Regarding appointment of Deposit Trustees:

Answer 6

1. Appointed by Eligible and Normal Public Company when accepting secured and deposits.
2. They protect depositors’ interest.
3. Sign a contract called Trust Deed, containing terms and conditions of their agreement.
4. Trust Deed signed at least 7 days before issuing circular/advertisement.
5. On his own or behalf of 1/10 depositors can call a meeting of all depositors when a company defaults in repaying.
6. Security is created in favour of Deposit Trustee.
7. His name is mentioned in the Circular/Advertisement.