Companies Act 2013: Acceptance of Deposits

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Questions and Answers

What is the main objective of controlling companies which invite deposits?

To reduce the regulations on accepting deposits

To increase the number of companies accepting deposits

To protect the interests of individuals offering deposits (correct)

To maximize the profits of the corporate sector

Which section of the Companies Act deals with the prohibition on acceptance of deposits?

Section 76

Section 76A

Section 73 (correct)

Section 74

What is the punishment for contravention of the provisions relating to acceptance of deposits by companies?

Section 73

Section 76A (correct)

Section 74

Companies (Acceptance of Deposits) Rules, 2014

What concept does Chapter V of the Companies Act mainly address?

Acceptance of deposits Signup and view all the answers

What does 'eligible companies' refer to in the context of accepting deposits from the public?

Companies permitted to accept deposits from the public Signup and view all the answers

Which chapter of the Companies Act consists of sections 73 to 76A?

Chapter V Signup and view all the answers

According to section 2 (31) of the Companies Act, 2013, the term 'deposit' includes which of the following?

Any receipt of money by way of deposit, loan, or in any other form Signup and view all the answers

Which of the following is NOT a feature of the definition of 'deposit' as per section 2 (31) of the Companies Act, 2013?

Premature repayment of a deposit cannot be made by the company Signup and view all the answers

What types of deposits are explained in the given text?

Secured deposits and unsecured deposits Signup and view all the answers

Which of the following is NOT considered as a deposit according to Rule 2 (1) (c)?

Any amount received from private companies Signup and view all the answers

As per the Companies Act, 2013, who can accept deposits from its members only?

Private company Signup and view all the answers

What is the maximum number of persons in joint names that can accept a deposit according to the Companies Act, 2013?

Three persons Signup and view all the answers

Which of the following entities can guarantee repayment and hence are not considered as deposit according to Rule 2 (1) (c)?

(i) Central Government and state Government Signup and view all the answers

Which of the following is true about repayment of every deposit accepted by the company?

It will always be repaid with interest Signup and view all the answers

'Premature repayment' of a deposit can be made by which type of company?

(xi) A public company Signup and view all the answers

'Unsecured deposits' are explained as having what kind of security available?

'Unsecured deposits' have partial or no security made available Signup and view all the answers

Study Notes

Objective of Controlling Deposit-Inviting Companies

To safeguard the interests of depositors and maintain financial stability within the market.

Prohibition on Acceptance of Deposits

Section 73 of the Companies Act addresses the prohibition on accepting deposits from the public.

Punishment for Contraventions

Companies contravening deposit acceptance provisions may face penalties, including fines or imprisonment for responsible officers.

Chapter V of the Companies Act

Focuses primarily on the regulation of deposits and related provisions.

Eligible Companies

Refers to companies that meet specific criteria outlined by the Companies Act for accepting deposits from the public.

Relevant Sections of the Companies Act

Chapter V consists of sections 73 to 76A, governing the acceptance of deposits.

Definition of Deposit

According to Section 2(31), the term 'deposit' includes money received by a company for a specified period with an assurance of repayment.

Features Excluded from Deposit Definition

An advance or loan made by members is not classified as a deposit under the definition in Section 2(31).

Types of Deposits

Various deposit types include secured, unsecured, and specific classifications related to the nature of the company and terms.

Exclusions from Deposit According to Rule 2(1)(c)

Any advance payment made for the supply of goods or services that is refundable is not classified as a deposit.

Accepting Deposits from Members

Only specific entities, such as private companies, can accept deposits solely from their members.

Maximum Number of Joint Depositors

The Companies Act limits the maximum number of joint names for depositors to two.

Guaranteeing Entities

Entities that provide a guarantee for repayment do not classify the funds as deposits under Rule 2(1)(c).

Repayment of Deposits

Every company must ensure the timely repayment of deposits accepted, as per legal obligations.

Premature Repayment of Deposits

Only companies that have adhered to specific regulations can offer premature repayment of deposits to their depositors.

Unsecured Deposits

Unsecured deposits are characterized by the absence of collateral or security, meaning they carry a higher risk for the depositor.

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Description

This quiz covers the statutory provisions in sections 73 to 76A of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014. It also explains important terms related to deposits as per section 2 (31) of the Act.