Maharashtra Board Class 12 Secretarial Practice Important Questions Chapter 5 Deposits

Balbharti Maharashtra State Board Class 12 Secretarial Practice Important Questions Chapter 5 Deposits Important Questions and Answers.

Maharashtra State Board 12th Secretarial Practice Important Questions Chapter 5 Deposits

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
No Deposits can be repaid before ___________ months.
(a) One
(b) Six
(c) Nine
Answer:
(b) Six

Question 2.
Premature deposits can be repaid after ___________ months.
(a) Two
(b) Three
(c) Four
Answer:
(b) Three

Question 3.
___________ company cannot collect deposits from the public.
(a) Private
(b) Public
(c) Government
Answer:
(a) Private

Question 4.
A copy of return of deposits must be sent to ___________
(a) Registrar of companies
(b) Govt of India
(c) State bank of India
Answer:
(a) Registrar of companies

Question 5.
On acceptance of deposits, companies required to keep register of deposits at ___________
(a) Office of the registrar
(b) Sebi office
(c) Registered office of the company
Answer:
(c) Registered office of the company

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(1) Return of deposits	(a) Cognisable criminal offense
(2) Deposits in contravention of the law	(b) 25% of paid-up capital
(3) Deposit Repayment Reserve Account	(c) Delivered to the registrar of companies
(4) Registrar of Companies	(d) Approved by the SEBI
(5) Eligible public company	(e) Filing of circular or advertisement
	(f) On or before 30th June every year
	(g) Not less than 15%
	(h) Net worth 100 crores
	(i) Net worth 10 crores
	(j) No punishment

Answer:

Group ‘A’	Group ‘B’
(1) Return of deposits	(f) On or before 30th June every year
(2) Deposits in contravention of the law	(a) Cognisable criminal offense
(3) Deposit Repayment Reserve Account	(g) Not less than 15%
(4) Registrar of Companies	(e) Filing of circular or advertisement
(5) Eligible public company	(h) Net worth 100 crores

Question 2.

Group ‘A’	Group ‘B’
(1) Private company	(a) Approval of secretary
(2) Period of deposit	(b) Can accept deposits from the public
(3) Validity of advertisement	(c) Can accept deposits from its members or relatives of directors or directors
(4) Board of directors	(d) Six months to three years
(5) Public company	(e) Approval of depositors
	(f) Right to accept deposits
	(g) Six months to forty-two months
	(h) Refund of deposit before maturity
	(i) Ten months after the expiry of the financial year
	(j) Six months after the expiry of the financial year

Answer:

Group ‘A’	Group ‘B’
(1) Private company	(c) Can accept deposits from its members or relatives of directors or directors
(2) Period of deposit	(d) Six months to three years
(3) Validity of advertisement	(j) Six months after the expiry of the financial year
(4) Board of directors	(f) Right to accept deposits
(5) Public company	(b) Can accept deposits from the public

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
An acknowledgment of deposit accepted by the company.
Answer:
Deposit Receipt

Question 2.
Type of company that can accept deposits from members as well as the public.
Answer:
Eligible Public Company

Question 3.
A record of details of public deposits maintained by the company.
Answer:
Deposit register

Question 4.
The authority which has the power to accept deposits.
Answer:
Board of Directors

Question 5.
Return on investments as deposits in the company.
Answer:
Interest

Question 6.
Time within which company has to issue deposit receipt.
Answer:
30 Days

1D. State whether the following statements are true or false.

Question 1.
A company can accept deposits payable on demand.
Answer:
False

Question 2.
A company can accept deposits to any extent.
Answer:
False

Question 3.
Acceptance of deposits is the same as a renewal.
Answer:
False

Question 4.
Deposits may be secured or unsecured.
Answer:
True

1E. Find the odd one.

Question 1.
Record of deposits registered office of the companies, Registrar of companies.
Answer:
Registrar of companies

Question 2.
Six months, thirty-six months, forty-two months.
Answer:
Forty-two months

Question 3.
Advertisements, Circular, Board meeting.
Answer:
Board meetings

Question 4.
English newspaper, application for, a regional newspaper.
Answer:
Application forms

Question 5.
Return of deposits, stock exchange, registrar of companies.
Answer:
Stock Exchange

1F. Answer in one sentence.

Question 1.
Are loans and deposits the same?
Answer:
Loans mean any sum borrowed by a company. It has to be repaid instantly or when demanded by the lender whereas deposits are sums borrowed by the company but repaid only on a fixed maturity date.

2. Explain the following terms/concepts.

Question 1.
Register of Deposit
Answer:

Register for Deposits records all the deposits accepted or renewed by the company at its registered office.
The details of the deposit along with the details of the depositors should be entered in the Register of Deposits within seven days from the date of issue of the Deposit Receipt.

Question 2.
Interest on Deposit
Answer:

The return received on the deposit amount is called Interest on Deposit.
The rate of interest on deposits is decided by the Reserve Bank of India from time to time.
In case of premature repayment of deposits, the company can deduct 1% interest from the rate of interest stated at the time of acceptance of the deposit.

3. Answer in brief.

Question 1.
Explain the provisions related to the period/tenure of deposits.
Answer:
The provisions related to the period/tenure of deposits are as follows:

No deposit can be accepted or renewed which is to be repaid within a period of six months or more than thirty-six months.
In certain circumstances, a company may accept deposits repayable earlier than six months to meet its short-term needs.
Such deposits must have a tenure of a minimum of three months and the number of such deposits cannot be more than 10% of the aggregate of the paid-up share capital and free reserves of the company.
Under certain circumstances, at the request of the depositor, the company makes premature repayment of deposits.
The company may also renew its deposits with the same terms of issue and it will be considered as fresh deposits.

4. Answer the following questions.

Question 1.
Explain terms and conditions for acceptance of deposits.
Answer:
The company raises funds by accepting deposits from the public and its own members. In other words, it is a short-term loan taken by the company. The company can collect deposits on certain terms and conditions laid down by the Companies Act 2013. They are as follows:
(i) Amount of Deposit:
Different types of companies have different terms and conditions for accepting deposits.
The following table shows the percentage of acceptance of deposits.

Companies	Acceptance of Deposits (%)
(i) Private Company	Up to 100% of the aggregate of paid-up share capital and free reserves
(ii) Public Company	Should not exceed 25% of the aggregate of paid-up capital and free resources
(iii) Eligible Public Company	Should not exceed 25% of the aggregate paid-up capital and free reserves in case of the public. Should not exceed 10% of the aggregate paid-up capital and free reserves in case of members.
(iv) Government Company	Should not exceed 35% of the paid-up share capital and free reserves.

(ii) Period/Tenure of Deposit:

The tenure of deposit should be more than six months but less than thirty-six months.
Under certain circumstances only, the company can accept deposits for 3 months.
The company can make premature repayment of deposits after a minimum of 3 months.

(iii) No demand deposit:
The company cannot accept or renew deposits repayable on demand.

(iv) Secured or Unsecured Deposit:

A company can accept secured or unsecured deposit if it is mentioned in the circular or advertisement.
A company offering secured deposits has the right to create a charge on its tangible assets within 30 days of acceptance of deposits.

(v) Application Form:

A prescribed application form is to be filled by the applicant.
This application form is given by the company.
It includes a declaration made by the applicant that the deposit he is making is not borrowed from any person.

(vi) Joint names:
The company can accept deposits in joint names of depositors. But there should not be more than three names.

(vii) Nomination:

Every depositor has to nominate at least one person.
Nominee enjoys all the benefits in the event of death of the depositor.

(viii) Circular or Advertisement:

If a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, the company has to issue an advertisement.
A copy of the circular or advertisement signed by all directors must be filed with the Registrar of Companies.
Issue of Circular or Advertisement:
The company has to publish the advertisement in one English newspaper and one vernacular/regional newspaper.

(ix) Appointment of Deposit Trustee:

Deposit Trustee is appointed by the public companies and eligible public companies.
One of the more deposit trustees is appointed if secured deposits are issued.
A contract ‘Trust Deed’ is signed between the company and deposit trustee.

(x) Create charge on assets:
The company secured deposits create a charge on its tangible assets within 30 days of acceptance.

(xi) Deposit Insurance:

A company needs to take Deposit Insurance at least 30 days before the issue of circular or advertisement.
Deposit insurance is necessary only when the deposit amount plus interest is up to ₹ 20,000.

(xii) To obtain a credit rating:

The company obtains credit ratings for deposits on the basis of the net worth of the company, liquidating position, ability to repay deposits on time, etc.
Credit rating for deposits is given by credit rating agencies.
The rating is done every year during the tenure of deposits.

(xiii) Open Deposit Repayment Reserve Account:

A Deposit Repayment Reserve Account is opened in a scheduled bank for accepting deposits.
The company has to deposit an amount up to 15% of the number of deposits maturing during the current year and following the financial year on or before 30th April.
This account is used only for repaying deposits only.

(xiv) Deposit Receipt:

Deposit Receipt is to be issued to the depositors within 21 days from the date of receipt of money or realization of cheque.
The receipt has to be signed by the officer duly authorized by the Board of Directors.
The Receipt contains the name and address of the depositor, amount of deposit, rate of interest payable, and date on which it is repayable.

(xv) Register of Deposit:

Register of Deposit is to be maintained by the company at its registered office.
The details of the deposit accepted and renewal of the deposits are recorded and depositors are recorded in the Register of Deposits.
Deposit Receipt should be issued within 7 days from the date of issue.

(xvi) Return of Deposit:

A Return of Deposit should be recorded with the company on or before 30th June every year.
The return includes details of deposit with the company as of 31st March of that year.

(xvii) Interest:

Reserve Bank of India decides the rate of interest on deposits.
The rate of interest changes from time to time.
In case of premature repayment of deposits, the company can deduct 1% interest from the rate of interest.
If the deposits matured and are claimed but remain unpaid by the company, the company will be liable to pay a penal rate of interest at the rate of 18%.

(xviii) Right to alter the Terms and Conditions:
A company cannot directly or indirectly alter the terms and conditions of the Deposit, Deposit Trust Deed, and Deposit Insurance, once the circular or advertisement is issued and deposits are accepted.

(xix) Disclosure in financial statements:
Deposit money received by the company from the Directors or the relatives of the Directors (in the case of a private company) should be disclosed in the company financial statement.

(xx) Punishment:

As per the Companies Act, an officer of the company will be liable for punishment if found guilty / not fulfilling the provisions of the Act.
The Maharashtra Protection of Interest of Depositors (in Financial establishments) Act, 1999 has the right to take action against companies and also punish if found guilty.
Companies in Maharashtra will be punished for contravening the provisions of this Act also.

Question 2.
Explain the procedure for accepting deposits from the public.
Answer:
Only Eligible Public Companies can accept deposits from the public.
Following is the procedure to be followed for accepting deposits from the public:
(i) Hold Board Meeting:

A resolution is passed in the Board Meeting for accepting the deposits from the public.
The details of the amount of deposit, terms and conditions of issue, etc. are decided in this meeting.

(ii) Hold a General Meeting:

A General Meeting is held by the company for seeking shareholders’ approval for accepting deposits.
A Special resolution is passed and filed with the Registrar of Companies and if needed with RBI also.

(iii) Hold Board Meeting:

The board meeting is held to verify and approve the draft of the advertisement.
The draft should be signed by the majority of the Directors of the company.

(iv) Appoint Banker:
The company has to appoint a banker so that the applicants can submit their application form along with the deposit money.

(v) Obtain Credit Rating:

The company has to obtain a Credit rating from a recognized Credit Rating Agency.
This helps in the goodwill of the company.
This credit rating should be mentioned in the advertisement.

(vi) Appoint Deposit Trustee:

The company appoints Deposit Trustees when secured deposits are issued.
It is a contract between the company and Trustee i.e. Deposit Trustee Deed.
The Deposit Trust deed contains the terms and conditions.
The deed has to be signed at least 7 days before issuing the advertisement.

(vii) Take Deposit Insurance:

The company enters into an agreement with the Insurance Company 30 days before issuing the advertisement.
Deposit Insurance is necessary only when the deposit amount plus interest exceeds ₹ 20,000.

(viii) File a copy of the advertisement with the Registrar of Companies:

A copy of the advertisement has to be filed with the Registrar of Companies.
The company can publish the advertisement after 30 days of filing.

(ix) Advertisement to the Public:

Advertisement is published for the public after 30 days of filing with the Registrar of Companies.
The advertisement has to be published in one English newspaper and one regional newspaper having wide circulation in the state where the company’s registered office is located.

(x) Upload the advertisement on the company’s website:
After releasing the advertisement to the public, it is also necessary to upload it on the company’s website.

(xi) Collect application form and money:
The banker collects the application forms along with the deposit money on behalf of the company.

(xii) Issue Deposit Receipt:
The company has to issue a Deposit Receipt within 21 days from the date of receipt of money or realization of cheque.

(xiii) Create charge on assets:

The company issuing secured deposits can create charges on its assets.
This charge of assets should be created within 30 days of acceptance of the deposit.

(xiv) Make entries in Register of Deposits:
Secretary has to record the details of deposits in the Register of Deposits within the 7 days after issuing the Deposit Receipt.
The entries have to be verified by an authorized officer.

(xv) File Return of Deposits with Registrar of Companies:

The company has to file a Return of Deposit before 30th June every year.
The return has details of Deposits with the company as of 31st March

Question 3.
Explain the procedure for accepting deposits from members.
Answer:
The following is the procedure to accept deposits from members:
(i) Hold Board Meeting:

Secretary arranges for a Board Meeting.
In the Board Meeting, decisions regarding the amount of deposit, terms of issue of deposit, etc. are decided.

(ii) Hold a General Meeting:

To seek approval from shareholders for accepting deposits, the company holds a general meeting.
A special resolution is passed in a general meeting and filed with the Registrar of Companies.

(iii) Hold Board Meeting:

After getting shareholder’s approval, a Board meeting is held to approve the draft of the circular for inviting applications for deposits from members.
The draft should be signed by a majority of the Directors of the company.

(iv) Appoint Banker:
A Banker is appointed for collecting the application forms and the Deposit money on behalf of the company.

(v) Obtain Credit Rating:

Credit rating agencies rate the company’s deposit.
The rating given by the Credit Rating Agency must be mentioned in the circular.

(vi) Appoint Deposit Trustee:

Company appoints Deposit Trustees.
The Trust deed is signed at least 7 days before issuing the circular.

(vii) Take Deposit Insurance:
The company takes Deposit Insurance at least 30 days before issuing the circular.

(viii) File a copy with Registrar of Companies:
A copy of the circular is filed with the Registrar of Companies and can be issued to the members-only after 30 days of filing.

(ix) Issue circular to members:

The company sends the circulars to members after 30 days of filing them with the Registrar.
It is sent by registered post, speed post, or email. The company may even publish the circular in newspapers.

(x) Upload circular on company’s website:

An eligible public company has to upload the circular on the company’s website.
Whereas, it is optional for a private company and other public companies.

(xi) Collect application form and money:
The company informs the bank to collect the application form along with the deposit money.

(xii) Issue of Deposit Receipt:

A deposit Receipt is issued by the company.
It should be issued within 21 days from the date of receipt of the money or realization of the cheque.

(xiii) Create charge on assets:
If a company accepts secured deposits, it has to create a charge on its assets within 30 days of acceptance of deposits.

(xiv) Make entries in Register of Deposits:

Secretary has to enter the details of deposits in the Register of Depositors within 7 days from the date of issue of Deposit Receipt.
It has to be signed by an authorized officer.

(xv) File Return of Deposits:

The company has to file a return of deposit before 30th June every year.
The return has details of deposits with the company as of 31st March.