Page 187 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes Financial Reconstruction, has specifically, by order, suspended the operation of any
contract, agreement, settlement, etc. under s.22(3) of the said Act.
(iv) Deposits accepted by relief undertakings which are notified as such under the State

Laws.

Further, it may be clarified that the depositors can, besides the relief under the Companies
Act, take action against the defaulting companies under the normal civil law of the
country.
13. Penal interest on overdue Deposits. Rule 8A provides that a penal rate of interest of 18
percent shall be paid for the overdue period in case of public deposits matured and claimed
but remaining unpaid.
In the case of deposits made by a small investor, the penal rate of interest shall be 24 percent
compoundable on annual basis.
14. Maintenance of liquid assets. Every company shall before the 30th day of April of each
year, deposit or invest, as the case may be, a sum which shall not be less than 15 per cent
(w.e.f. 1st April 1992) of the amount of its deposits maturing during the year ending on the
31st of March next following in any one or more of the securities prescribed in this regard.
The amount so invested or deposited shall only be used in repayment of the deposits
outstanding and repayable within next 31st March. At no time such investment or deposit
shall fall below 10% of the deposits repayable within next 31st March.

It may be noted that all deposits of non-banking and non-financial companies are regulated
under s.58A and the Rules made thereunder.
15. Register of deposits. According to Rule 7, every company accepting deposits shall keep at
its registered office one or more registers in which there shall be entered separately in the

case of each depositor the following particulars, namely:
(a) name and address of the depositor;
(b) date and amount of each deposit;

(c) duration of the deposit and the date on which each deposit is repayable;
(d) rate of interest;
(e) date or dates on which repayment of interest will be made;
(f) any other particulars relating to the deposit.

The register of deposit shall be kept for a minimum period of 8 years from the fi nancial
year in which the latest entry is made in the register.
16. Facility of nomination etc. A depositor under s.58A is allowed to make a nomination. The
provisions of Ss. 109 A and 109 B shall apply to such a nomination also.
17. Small Depositors - Special Provisions (Sections 58AA and 58AAA). The Companies
(Amendment) Act, 2000 added two new Sections, viz., Sections 58AA and 58AAA, for the
protection of small depositors. ‘A small depositor’ means a depositor who has invested in
a financial year a sum not exceeding Rupees twenty thousand in a company and includes

his successors, nominees and legal representatives.
1. If any default is made by a company in repayment of any public deposit accepted
from small depositor or part thereof or any interest thereupon, s. 58AA makes it
obligatory on the part of a company to give an intimation on monthly basis to the
Company Law Board within 60 days from date of default. Such intimation shall
include particulars in respect of the names and addresses of each small depositor,
the principal sum of deposits due to them and interest accrued thereupon.

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