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CA Intermediate · Corporate and Other Laws · Acceptance of Deposits by Companies

Meridian Pharma Ltd accepted deposits from the public under a duly filed circular. A depositor, Mr Iyer, asks whether the company can pay him brokerage for procuring other deposits. Which is the correct position?

A company can pay brokerage on deposits, but only within the maximum limit set by the deposit Rules. It is not free to pay at any rate, and it is not prohibited from paying brokerage altogether.

  1. ACompany may pay brokerage at any rate it decides
  2. BCompany may pay brokerage only if it is a government company
  3. CCompany may pay brokerage subject to the permitted limit prescribed in the Rules, and not exceeding itCorrect
  4. DCompany is forbidden from paying any brokerage on deposits

Explanation

A company may pay reasonable brokerage for deposit mobilisation, but only within the limit prescribed in the Rules. It is therefore neither unrestricted nor wholly prohibited. The government-company limitation is not part of the rule.

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