Chapter 5: Acceptance of Deposits by Companies - Test 2: answer key

Question 1 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Scenario. Anekta Garments Ltd. is a public company incorporated in 2010, engaged in manufacturing and retail of apparel. As on 31 March 2026, its paid-up equity share capital is ₹60 crore, free reserves are ₹25 crore, and securities premium account is ₹15 crore. Its net worth, computed as per the Companies Act, 2013, is ₹105 crore. Its turnover for FY 2025-26 was ₹480 crore. The Board wishes to accept deposits from the public during FY 2026-27 to fund a new garmenting unit. A general meeting was convened on 12 May 2026, and the resolution approving acceptance of deposits from the public was passed with 68% of the votes cast in favour. The company filed the resolution with the Registrar on 20 May 2026. It proposes to accept ₹40 crore from the public. It has existing outstanding deposits from members of ₹8 crore. The company’s credit rating from a recognised agency is ‘A-’ (adequate safety) and is valid until March 2027. The company has not created any charge on its assets for the proposed deposits. Based on the above facts and the Companies Act, 2013, answer the following.

Does Anekta Garments Ltd. satisfy the eligibility criteria to accept deposits from the public under Section 76?

1. Yes, because its net worth of ₹105 crore is not less than ₹100 crore, and it satisfies the net-worth alternative even though its turnover is below ₹500 crore. (correct answer)
2. No, because its net worth of ₹105 crore and turnover of ₹480 crore both fall below the prescribed thresholds of ₹100 crore net worth and ₹500 crore turnover respectively.
3. No, because a public company must satisfy both the net-worth test and the turnover test simultaneously.
4. Yes, because any public company with a net worth exceeding ₹50 crore is eligible to accept public deposits.

Answer: A — Yes, because its net worth of ₹105 crore is not less than ₹100 crore, and it satisfies the net-worth alternative even though its turnover is below ₹500 crore.

Explanation. An ‘eligible company’ under Rule 2(1)(e) is a public company having a net worth of not less than ₹100 crore OR a turnover of not less than ₹500 crore. The two tests are alternatives, not cumulative. Anekta’s net worth of ₹105 crore satisfies the net-worth limb, so it is eligible notwithstanding its turnover of ₹480 crore. Option (b)) wrongly treats both thresholds as mandatory; option (c) makes the tests cumulative; option (d) invents a ₹50 crore threshold.

Where it goes wrong. Students often read ‘and’ where the statute uses ‘or’, or they treat both financial thresholds as cumulative conditions.

Authority. Section 76(1) of the Companies Act, 2013; Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014

Question 2 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Is the resolution passed by Anekta Garments Ltd. on 12 May 2026 sufficient for accepting deposits from the public?

1. Yes, because an ordinary resolution is sufficient for a public company to accept deposits from the public.
2. No, because the resolution was not passed by the requisite majority, as a special resolution requires at least 75% of the votes cast in favour. (correct answer)
3. No, because the resolution must be passed unanimously by all shareholders.
4. Yes, because 68% is a sufficient majority for any resolution relating to deposits.

Answer: B — No, because the resolution was not passed by the requisite majority, as a special resolution requires at least 75% of the votes cast in favour.

Explanation. Rule 2(1)(e) requires an eligible company to obtain prior consent in general meeting by means of a special resolution and file it with the Registrar before inviting public deposits. A special resolution requires at least 75% of the votes cast in favour. The resolution received only 68%, which is below the threshold, so it is not a valid special resolution. The ordinary-resolution relaxation applies only where an eligible company accepts deposits within the limits specified under Section 180(1)(c), which is not the case here. Option (a)) ignores the special-resolution requirement; option (d) applies the wrong majority.

Where it goes wrong. Students often recall that a ‘resolution’ is needed but forget that for eligible companies it must specifically be a special resolution unless the Section 180(1)(c) exception applies.

Authority. Section 76(1) of the Companies Act, 2013; Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014

Question 3 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

What is the maximum amount Anekta Garments Ltd. may accept from the public during FY 2026-27, considering its existing member deposits and the statutory limits for non-government eligible companies?

1. ₹25 crore, because the public deposit limit is 25% of the aggregate of paid-up capital, free reserves and securities premium, and the existing member deposits do not affect the public limit.
2. ₹17 crore, because the aggregate ceiling for public and member deposits is 35% of the aggregate of paid-up capital, free reserves and securities premium, and the existing member deposits must be deducted.
3. ₹25 crore, because the public deposit limit is 25% of the aggregate of paid-up capital, free reserves and securities premium, and the existing member deposits of ₹8 crore are within their separate 10% sub-limit. (correct answer)
4. ₹21 crore, because the public deposit limit is 25% of the aggregate of paid-up capital, free reserves and securities premium, reduced by the existing member deposits of ₹8 crore.

Answer: C — ₹25 crore, because the public deposit limit is 25% of the aggregate of paid-up capital, free reserves and securities premium, and the existing member deposits of ₹8 crore are within their separate 10% sub-limit.

Explanation. For a non-government eligible company, Rule 3(4) prescribes two separate ceilings: deposits from members cannot exceed 10% of the aggregate of paid-up capital, free reserves and securities premium, and deposits from persons other than members cannot exceed 25% of that aggregate. The aggregate base is ₹100 crore (₹60 crore + ₹25 crore + ₹15 crore). The member-deposit ceiling is ₹10 crore, and the existing ₹8 crore is within it. The public-deposit ceiling is ₹25 crore. The public and member ceilings operate independently, so the existing member deposits do not reduce the public headroom. Option (d)) incorrectly deducts member deposits from the public ceiling; option (b) applies the government-company 35% aggregate ceiling.

Where it goes wrong. Students often subtract existing member deposits from the public ceiling or apply the single 35% aggregate limit meant for government eligible companies.

Authority. Rule 3(4) of the Companies (Acceptance of Deposits) Rules, 2014; Rule 3(5) of the Companies (Acceptance of Deposits) Rules, 2014

Question 4 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

What is the consequence of Anekta Garments Ltd. not creating a charge on its assets for the proposed public deposits?

1. There is no consequence, because creation of a charge is optional for eligible companies accepting deposits from the public.
2. The company must obtain the prior approval of the Tribunal before accepting unsecured deposits from the public.
3. The acceptance of deposits is automatically void, and the company must refund the amounts immediately.
4. The deposits will be treated as unsecured deposits, and the company must state that they are unsecured in every circular, advertisement, and related document. (correct answer)

Answer: D — The deposits will be treated as unsecured deposits, and the company must state that they are unsecured in every circular, advertisement, and related document.

Explanation. Section 73(2)(f) permits a company to provide security for deposits and, where security is provided, to create a charge on its property or assets. If the company does not secure the deposits or secures them partially, the deposits are termed ‘unsecured deposits’ and must be so quoted in every circular, form, advertisement, or document related to the invitation or acceptance of deposits. Non-creation of a charge does not make acceptance void; it changes the characterisation to unsecured. Option (a) wrongly treats security as optional without consequences; option (c) invents an automatic voiding; Option (b)) invents a Tribunal approval requirement.

Where it goes wrong. Students may assume that eligible companies must always create a charge, or that failing to do so invalidates the deposit acceptance altogether.

Authority. Section 73(2)(f) of the Companies Act, 2013; Rule 6 of the Companies (Acceptance of Deposits) Rules, 2014

Question 5 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Scenario. Suryodaya Power Ltd. is a public company wholly owned by the Government of Rajasthan. Its paid-up share capital is ₹80 crore, free reserves are ₹30 crore, and securities premium is ₹10 crore, aggregating ₹120 crore. It has been accepting deposits from the public under Section 76. As on 1 April 2026, it has outstanding public deposits of ₹25 crore and member deposits of ₹5 crore. The company proposes to renew existing deposits and accept fresh deposits aggregating ₹15 crore from the public during FY 2026-27. The company obtained a credit rating from a recognised agency in March 2025, which is still valid. It has not obtained a fresh rating for FY 2026-27. The company also wants to accept secured deposits and has appointed a trustee for depositors. The deposit trust deed in Form DPT-2 is proposed to be executed on 1 June 2026, and the circular in Form DPT-1 is proposed to be issued on 5 June 2026. Based on the above facts and the Companies Act, 2013, answer the following.

Suryodaya Power Ltd. has outstanding public deposits of ₹25 crore and member deposits of ₹5 crore on a base of ₹120 crore. It proposes fresh public deposits of ₹15 crore. What is the maximum additional amount it can accept from the public without breaching the ceiling applicable to a government eligible company?

1. Nil, because the aggregate of existing public and member deposits (₹30 crore) plus the proposed ₹15 crore would exceed 35% of ₹120 crore. (correct answer)
2. ₹15 crore, because a government eligible company can accept deposits from the public up to 35% of the aggregate of paid-up capital, free reserves and securities premium, and the aggregate base is ₹120 crore.
3. ₹25 crore, because the public-deposit ceiling for every eligible company is 25% of the aggregate, irrespective of government ownership.
4. ₹12 crore, because the member deposits of ₹5 crore must first be deducted from the 35% aggregate ceiling, leaving headroom for only ₹12 crore of fresh public deposits.

Answer: A — Nil, because the aggregate of existing public and member deposits (₹30 crore) plus the proposed ₹15 crore would exceed 35% of ₹120 crore.

Explanation. For a Government eligible company, Rule 3(5) prescribes a single aggregate ceiling of 35% of the aggregate of paid-up share capital, free reserves and securities premium. Thirty-five per cent of ₹120 crore is ₹42 crore. Existing deposits aggregate ₹30 crore (₹25 crore public + ₹5 crore members), leaving headroom of ₹12 crore. The proposed fresh public deposits of ₹15 crore would take the aggregate to ₹45 crore, exceeding the ₹42 crore ceiling by ₹3 crore. Therefore, no additional public deposits can be accepted without breaching the ceiling. Option (b) ignores the existing deposits; option (c) applies the non-government 25% public sub-limit; option (d) erroneously deducts member deposits from the ceiling instead of including them in the aggregate.

Where it goes wrong. Students often forget that for government eligible companies the ceiling is a single 35% aggregate cap covering both public and member deposits, not separate 25% and 10% sub-limits.

Authority. Rule 3(5) of the Companies (Acceptance of Deposits) Rules, 2014

Question 6 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Is Suryodaya Power Ltd. compliant with the credit-rating requirement for FY 2026-27?

1. Yes, because a credit rating obtained once is valid for the entire tenure of the deposits.
2. No, because an eligible company must obtain a credit rating at least once in a year for deposits accepted by it, and the rating must be sent to the Registrar along with Form DPT-3. (correct answer)
3. No, because a government eligible company is exempt from the credit-rating requirement.
4. Yes, because the rating was obtained from a recognised agency and is still within its validity period.

Answer: B — No, because an eligible company must obtain a credit rating at least once in a year for deposits accepted by it, and the rating must be sent to the Registrar along with Form DPT-3.

Explanation. Rule 3(8) requires every eligible company to obtain, at least once in a year, credit rating for deposits accepted by it, and a copy of the rating must be sent to the Registrar along with the return of deposits in Form DPT-3. The rating obtained in March 2025 is a prior-year rating; a fresh rating is required for FY 2026-27. Government eligible companies are not exempt from this requirement. Option (a) incorrectly treats the rating as a one-time exercise; option (d) confuses the rating’s validity with the statutory annual-obtention obligation.

Where it goes wrong. Students may think a valid rating is enough, overlooking the rule that a fresh rating must be obtained at least once every year during the tenure of deposits.

Authority. Rule 3(8) of the Companies (Acceptance of Deposits) Rules, 2014

Question 7 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Suryodaya Power Ltd. proposes to execute the deposit trust deed in Form DPT-2 on 1 June 2026 and issue the circular in Form DPT-1 on 5 June 2026. Is this compliant with Rule 7?

1. Yes, because the trust deed must be executed at any time before the deposits are actually accepted.
2. No, because the trust deed must be executed at least thirty days before issuing the circular or advertisement.
3. No, because the trust deed must be executed at least seven days before issuing the circular or advertisement, and 1 June to 5 June is only four days. (correct answer)
4. Yes, because a government eligible company is exempt from executing a deposit trust deed.

Answer: C — No, because the trust deed must be executed at least seven days before issuing the circular or advertisement, and 1 June to 5 June is only four days.

Explanation. Rule 7(2) requires the company to execute a deposit trust deed in Form DPT-2 at least seven days before issuing the circular or circular in the form of advertisement. From 1 June to 5 June is only four days, which falls short of the seven-day lead period. Option (a) disregards the specific lead time; Option (b)) inflates the period to thirty days; option (d) wrongly creates a government-company exemption.

Where it goes wrong. Students often remember that a trust deed is needed but forget the specific ‘at least seven days before the circular’ timeline.

Authority. Rule 7(2) of the Companies (Acceptance of Deposits) Rules, 2014

Question 8 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Can Suryodaya Power Ltd. appoint a trustee for depositors who is a director of the company?

1. Yes, because a director has the most intimate knowledge of the company’s affairs and is most suitable to protect depositors.
2. Yes, provided the director is an independent director and not a whole-time director.
3. No, unless the prior approval of the Reserve Bank of India is obtained.
4. No, because a director, key managerial personnel, or any other officer or employee of the company is disqualified from being appointed as a trustee for depositors. (correct answer)

Answer: D — No, because a director, key managerial personnel, or any other officer or employee of the company is disqualified from being appointed as a trustee for depositors.

Explanation. Rule 7(3) prohibits appointment of a person as a trustee for depositors if the proposed trustee is a director, key managerial personnel, or any other officer or employee of the company or of its holding, subsidiary, or associate company, or a depositor in the company. This disqualification applies to all directors, including independent directors; there is no RBI-approval route. Options (a) and (b) ignore the express prohibition; Option (c)) invents an RBI approval requirement.

Where it goes wrong. Students may think an independent director is sufficiently independent to act as a depositor trustee, overlooking the absolute bar on any director.

Authority. Rule 7(3) of the Companies (Acceptance of Deposits) Rules, 2014

Question 9 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Scenario. Vayu Renewables Ltd. is a public company with net worth of ₹140 crore. It accepted deposits from the public under Section 76 during FY 2024-25. The deposits matured on 31 March 2026, but the company failed to repay ₹15 crore along with interest. The depositors approached the National Company Law Tribunal, which, by order dated 15 September 2026, granted an extension of four months to repay, i.e., until 15 May 2027. Despite the extension, the company failed to repay by that date. The company’s directors include Mr. Khanna (Managing Director) and Ms. Rekha (Chief Financial Officer). The company now proposes to accept fresh deposits in FY 2027-28. The board believes that since the Tribunal had granted an extension, the default is not ‘wilful’ and fresh deposits can be accepted. Based on the above facts and the Companies Act, 2013, answer the following.

What is the penalty payable by Vayu Renewables Ltd. for failing to repay the deposits even after the Tribunal’s extension?

1. A fine of not less than ₹1 crore or twice the amount of deposit accepted, whichever is lower, extending up to ₹10 crore. (correct answer)
2. A fine of not less than ₹25 lakh extending up to ₹2 crore.
3. A fine of ₹1 lakh for each day of default.
4. Imprisonment of up to seven years for the company.

Answer: A — A fine of not less than ₹1 crore or twice the amount of deposit accepted, whichever is lower, extending up to ₹10 crore.

Explanation. Under Section 76A(a), where a company fails to repay the deposit or part thereof or any interest thereon within the time specified or extended by the Tribunal, the company is punishable with fine which shall not be less than ₹1 crore or twice the amount of deposit accepted, whichever is lower, but which may extend to ₹10 crore. The company also remains liable to pay the deposit and interest. Option (b) states the range for officers in default; option (d) wrongly applies imprisonment to the company, which is not a natural person.

Where it goes wrong. Students often mix up the company’s fine range with the officer-in-default’s punishment, or they wrongly impose imprisonment on the company itself.

Authority. Section 76A of the Companies Act, 2013

Question 10 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

What is the liability of Mr. Khanna and Ms. Rekha as officers in default for the non-repayment?

1. They are not personally liable because the liability to repay rests only on the company.
2. They are liable to imprisonment up to seven years and a fine of not less than ₹25 lakh extending up to ₹2 crore. (correct answer)
3. They are liable to a fine of ₹10 crore only.
4. They are liable to a fine of ₹1 lakh for each day of default.

Answer: B — They are liable to imprisonment up to seven years and a fine of not less than ₹25 lakh extending up to ₹2 crore.

Explanation. Section 76A(b) provides that every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years and with fine which shall not be less than ₹25 lakh but which may extend to ₹2 crore. This liability is independent of the company’s fine. Option (a) wrongly confines liability to the company; Option (c)) applies the company’s maximum fine to officers; option (d) invents a daily fine that is not prescribed.

Where it goes wrong. Students may assume officers are shielded by the corporate veil, or they may apply the company’s fine ceiling to the officers.

Authority. Section 76A(b) of the Companies Act, 2013

Question 11 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Can Vayu Renewables Ltd. accept fresh deposits in FY 2027-28 despite the default?

1. Yes, because the Tribunal granted an extension, which regularises the default.
2. Yes, because the default was not ‘wilful’, as the company had applied for and obtained an extension.
3. No, because a company that has defaulted in repayment of deposits is prohibited from accepting fresh deposits until the default is made good and five years have elapsed since the date of making good the default. (correct answer)
4. No, because a company that has defaulted must first convert itself into a non-banking financial company.

Answer: C — No, because a company that has defaulted in repayment of deposits is prohibited from accepting fresh deposits until the default is made good and five years have elapsed since the date of making good the default.

Explanation. Section 73(2)(e) requires a company to certify that it has not committed any default in repayment of deposits or payment of interest, and where a default had occurred, that it has made good the default and five years have lapsed since the date of making good the default. Vayu Renewables Ltd. has not repaid even after the Tribunal’s extension, so the default subsists. The extension does not cure the default for the purpose of fresh acceptance, and there is no ‘non-wilful’ exception. The company cannot accept fresh deposits until repayment is made and the five-year cooling period expires.

Where it goes wrong. Students may think a Tribunal extension regularises the default, or they may look for a ‘wilfulness’ test that does not exist in Section 73(2)(e).

Authority. Section 73(2)(e) of the Companies Act, 2013

Question 12 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

If the default was made good on 1 April 2027, from what date could Vayu Renewables Ltd. validly accept fresh deposits?

1. 1 April 2027, immediately upon making good the default.
2. 1 April 2028, after one year from making good the default.
3. 1 April 2030, after three years from making good the default.
4. 1 April 2032, after five years from making good the default. (correct answer)

Answer: D — 1 April 2032, after five years from making good the default.

Explanation. The proviso to Section 73(2)(e) requires that where a default had occurred, the company must have made good the default and a period of five years must have lapsed since the date of making good the default. If the default is made good on 1 April 2027, the five-year period expires on 31 March 2032, and fresh deposits can be accepted from 1 April 2032. Options (a), (b), and (d) apply shorter cooling periods that are not prescribed.

Where it goes wrong. Students may assume eligibility revives immediately upon repayment, or they may recall the wrong cooling period (one year or three years instead of five years).

Authority. Section 73(2)(e) of the Companies Act, 2013

Question 13 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Scenario. PQR Ltd., a public company with net worth of ₹90 crore and turnover of ₹520 crore, proposes to accept deposits from the public. Is it an ‘eligible company’ under Section 76?

PQR Ltd., a public company with net worth of ₹90 crore and turnover of ₹520 crore, proposes to accept deposits from the public. Is it an ‘eligible company’ under Section 76?

1. Yes, because its turnover of ₹520 crore exceeds the ₹500 crore threshold, and the net-worth and turnover tests are alternatives. (correct answer)
2. No, because its net worth of ₹90 crore is below ₹100 crore.
3. No, because both net worth and turnover thresholds must be satisfied.
4. Yes, but only if it obtains a special resolution and a credit rating.

Answer: A — Yes, because its turnover of ₹520 crore exceeds the ₹500 crore threshold, and the net-worth and turnover tests are alternatives.

Explanation. An eligible company is a public company having a net worth of not less than ₹100 crore OR a turnover of not less than ₹500 crore. PQR’s turnover of ₹520 crore satisfies the alternative turnover limb, so it is eligible notwithstanding its net worth of ₹90 crore. Option (b)) ignores the alternative; option (c) wrongly makes the tests cumulative; option (d) states procedural requirements but does not answer the eligibility question directly.

Where it goes wrong. Students often incorrectly require both the net-worth and turnover thresholds to be met, missing the disjunctive ‘or’ in the Rule.

Authority. Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014

Question 14 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Scenario. An eligible company proposes to accept deposits within the limits specified under Section 180(1)(c). What type of resolution is required for such acceptance?

An eligible company proposes to accept deposits within the limits specified under Section 180(1)(c). What type of resolution is required for such acceptance?

1. A special resolution in all cases.
2. An ordinary resolution is sufficient. (correct answer)
3. A resolution by postal ballot only.
4. No resolution is required if the deposits are secured.

Answer: B — An ordinary resolution is sufficient.

Explanation. Rule 2(1)(e) generally requires a special resolution for an eligible company to accept public deposits. However, the proviso expressly states that an eligible company accepting deposits within the limits specified under Section 180(1)(c) may accept deposits by means of an ordinary resolution. Option (a) ignores the proviso; option (c) invents a postal-ballot requirement; option (d) invents a security-based exemption.

Where it goes wrong. Students often learn the special-resolution rule but miss the ordinary-resolution relaxation for deposits within Section 180(1)(c) limits.

Authority. Proviso to Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014

Question 15 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Scenario. An eligible company accepted secured deposits from the public on 15 May 2026. By what date must it create a charge on its assets for the deposits?

An eligible company accepted secured deposits from the public on 15 May 2026. By what date must it create a charge on its assets for the deposits?

1. 14 July 2026, being sixty days from the date of acceptance.
2. 15 May 2026, being the date of acceptance itself.
3. 15 June 2026, being thirty days from the date of acceptance. (correct answer)
4. 30 June 2026, being the end of the quarter in which the deposits were accepted.

Answer: C — 15 June 2026, being thirty days from the date of acceptance.

Explanation. Rule 6 requires every company accepting secured deposits from the public to create a charge on its assets within thirty days from the date of acceptance. Thirty days from 15 May 2026 is 15 June 2026. Option (b) confuses acceptance with charge creation; Option (a)) doubles the period to sixty days; option (d) applies an unrelated quarter-end deadline.

Where it goes wrong. Students may recall the thirty-day period but misapply it from the date of the circular or the financial year-end instead of the date of acceptance.

Authority. Rule 6 of the Companies (Acceptance of Deposits) Rules, 2014

Question 16 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Scenario. A non-government eligible company with paid-up capital of ₹40 crore, free reserves of ₹10 crore, and securities premium of ₹5 crore wishes to accept deposits from members and the public. What are the respective ceilings?

A non-government eligible company with paid-up capital of ₹40 crore, free reserves of ₹10 crore, and securities premium of ₹5 crore wishes to accept deposits from members and the public. What are the respective ceilings?

1. Members: ₹5.5 crore; Public: ₹13.75 crore.
2. Members: ₹10 crore; Public: ₹25 crore.
3. Members: ₹11 crore; Public: ₹27.5 crore.
4. Members: ₹5.5 crore; Public: ₹13.75 crore, and the aggregate of both cannot exceed ₹19.25 crore. (correct answer)

Answer: D — Members: ₹5.5 crore; Public: ₹13.75 crore, and the aggregate of both cannot exceed ₹19.25 crore.

Explanation. For a non-government eligible company, Rule 3(4) prescribes separate ceilings: 10% of the aggregate of paid-up capital, free reserves, and securities premium for member deposits, and 25% of that aggregate for public deposits. The aggregate base is ₹55 crore (₹40 crore + ₹10 crore + ₹5 crore). Ten per cent is ₹5.5 crore and twenty-five per cent is ₹13.75 crore. The aggregate of both ceilings is ₹19.25 crore, which is 35% of the base. Option (b) applies a ₹100 crore base; option (a) omits the aggregate cap; Option (c)) doubles the percentages.

Where it goes wrong. Students often compute 10% and 25% on the wrong base or forget that the two ceilings operate together and cannot jointly exceed 35% of the base.

Authority. Rule 3(4) of the Companies (Acceptance of Deposits) Rules, 2014

Question 17 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Scenario. A Government eligible company has paid-up capital of ₹100 crore, free reserves of ₹20 crore, and securities premium of ₹10 crore. What is the maximum amount it can accept as deposits from the public and its members combined?

A Government eligible company has paid-up capital of ₹100 crore, free reserves of ₹20 crore, and securities premium of ₹10 crore. What is the maximum amount it can accept as deposits from the public and its members combined?

1. ₹45.5 crore, being 35% of the aggregate. (correct answer)
2. ₹32.5 crore, being 25% of the aggregate.
3. ₹13 crore, being 10% of the aggregate.
4. ₹130 crore, being the entire aggregate of paid-up capital and reserves.

Answer: A — ₹45.5 crore, being 35% of the aggregate.

Explanation. For a Government eligible company, Rule 3(5) prescribes a single aggregate ceiling of 35% of the aggregate of paid-up share capital, free reserves, and securities premium. The aggregate is ₹130 crore (₹100 crore + ₹20 crore + ₹10 crore), and 35% is ₹45.5 crore. This single ceiling covers both public and member deposits. Option (b)) applies the non-government public sub-limit; option (c) applies the member sub-limit; option (d) ignores the ceiling altogether.

Where it goes wrong. Students often apply the 25% and 10% sub-limits to government eligible companies instead of the single 35% aggregate ceiling.

Authority. Rule 3(5) of the Companies (Acceptance of Deposits) Rules, 2014

Question 18 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · medium

Scenario. An eligible company obtained a credit rating of ‘BBB’ (minimum investment grade) in April 2026. It proposes to invite public deposits in June 2026. Is the rating compliant?

An eligible company obtained a credit rating of ‘BBB’ (minimum investment grade) in April 2026. It proposes to invite public deposits in June 2026. Is the rating compliant?

1. No, because the rating must be at least ‘A’ grade for public deposits.
2. Yes, because the rating must not be below the minimum investment grade, and ‘BBB’ satisfies that requirement. (correct answer)
3. No, because the rating must be obtained only after the deposits are accepted.
4. Yes, but only if the rating is renewed every quarter.

Answer: B — Yes, because the rating must not be below the minimum investment grade, and ‘BBB’ satisfies that requirement.

Explanation. Rule 3(8) requires that the credit rating shall not be below the minimum investment grade rating or other specified credit rating for fixed deposits, as specified for NBFCs in the RBI Directions. ‘BBB’ is generally the minimum investment grade. The rating must be obtained before or at the time of invitation, not after acceptance, and must be obtained at least once a year, not quarterly. Option (a) invents a higher ‘A’ threshold; option (c) reverses the timeline; option (d) exaggerates the frequency.

Where it goes wrong. Students may confuse the minimum investment grade with a higher rating requirement, or they may misremember the annual (not quarterly) renewal frequency.

Authority. Rule 3(8) of the Companies (Acceptance of Deposits) Rules, 2014

Question 19 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Scenario. An eligible company issued a circular in Form DPT-1 on 10 May 2026. Its financial year closed on 31 March 2026, and its AGM for FY 2025-26 is scheduled for 29 September 2026. Until what date does the circular remain valid?

An eligible company issued a circular in Form DPT-1 on 10 May 2026. Its financial year closed on 31 March 2026, and its AGM for FY 2025-26 is scheduled for 29 September 2026. Until what date does the circular remain valid?

1. 30 September 2026, being six months from the closure of the financial year.
2. 10 November 2026, being six months from the date of the circular.
3. 29 September 2026, being the date of the AGM, as it is earlier than six months from the financial year-end. (correct answer)
4. 31 March 2027, being the end of the financial year in which the circular was issued.

Answer: C — 29 September 2026, being the date of the AGM, as it is earlier than six months from the financial year-end.

Explanation. Rule 4 provides that the circular remains valid until the earliest of: (a) six months from the closure of the financial year in which it is issued; or (b) the date on which the financial statements are laid before the company at the AGM, or the latest date by which the AGM should have been held. Six months from 31 March 2026 is 30 September 2026. The AGM is on 29 September 2026, which is earlier. Therefore, the circular is valid until 29 September 2026. Option (a) ignores the AGM limb; Option (b)) runs six months from the circular date; option (d) invents a financial-year-end validity.

Where it goes wrong. Students often apply only the six-month rule and miss the ‘earlier of the AGM date’ limb, which may cut short the validity.

Authority. Rule 4 of the Companies (Acceptance of Deposits) Rules, 2014

Question 20 · 2 marks · Chapter 5: Acceptance of Deposits by Companies · hard

Scenario. ABC Ltd., a non-government eligible company, accepted public deposits of ₹10 crore without appointing a trustee for depositors or executing a deposit trust deed. The deposits are secured. What is the consequence?

ABC Ltd., a non-government eligible company, accepted public deposits of ₹10 crore without appointing a trustee for depositors or executing a deposit trust deed. The deposits are secured. What is the consequence?

1. The deposits remain valid, but the company is liable to a penalty of ₹5,000 for each default.
2. The company must obtain the post-facto approval of the Registrar within thirty days to regularise the omission.
3. The deposits automatically become unsecured, and no penalty applies because the company has created a charge.
4. The company has contravened Section 76 read with Rule 7, and is liable to penalty under Section 76A, including a company fine of not less than ₹1 crore or twice the deposit amount (whichever is lower) up to ₹10 crore, and officer liability. (correct answer)

Answer: D — The company has contravened Section 76 read with Rule 7, and is liable to penalty under Section 76A, including a company fine of not less than ₹1 crore or twice the deposit amount (whichever is lower) up to ₹10 crore, and officer liability.

Explanation. Rule 7(1) prohibits an eligible company from issuing a circular or advertisement inviting secured deposits unless it has appointed one or more trustees for depositors for creating security, and Rule 7(2) requires execution of a deposit trust deed in Form DPT-2 at least seven days before issuing the circular. Acceptance of secured public deposits without complying with Rule 7 is a contravention of Section 76 read with the Rules, attracting the substantive penalties under Section 76A(a) and (b). Option (a) applies only the residual Rule 21 penalty of ₹5,000, which is not the principal consequence; option (c) invents an automatic conversion; Option (b)) invents a post-facto regularisation route.

Where it goes wrong. Students may either overlook the Rule 7 compliance entirely or apply only the small residual penalty instead of the substantive Section 76A consequences for a Section 76 contravention.

Authority. Section 76A of the Companies Act, 2013; Rule 7 of the Companies (Acceptance of Deposits) Rules, 2014