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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

A public company wishes to accept deposits from the public under section 76. Which statement is correct as per the Act?

A public company accepting deposits from the public must obtain a rating from a recognised credit rating agency covering net worth, liquidity and ability to pay on due date, and must obtain it every year during the tenure of the deposits. It is not a one-time or unsecured-only requirement.

  1. AIt must obtain a credit rating from a recognised agency, and the rating must be obtained every year during the tenure of the depositsCorrect
  2. BA credit rating is needed only once, at the time of the first invitation
  3. CA credit rating is needed only if the deposits are unsecured
  4. DAny private company with net worth above the limit may accept such deposits

Explanation

Section 76(1) allows a public company with prescribed net worth or turnover to accept deposits from public, and the first proviso requires a rating from a recognised credit rating agency, obtained for every year during the tenure of the deposits. It is not limited to unsecured deposits, and the section speaks of a public company.

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