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

Rajan Steels Ltd, a public company, received Rs 5 lakh from a director, who gave a written declaration that the amount was not borrowed from others. The company also received Rs 8 lakh as advance against supply of goods, adjusted within 365 days by delivery of goods. Which statement is correct about whether these are deposits?

Neither amount is a deposit. Money from a director with a declaration that it is not borrowed from others is excluded, and an advance for goods or services adjusted by supply within 365 days is also excluded under the Deposit Rules.

  1. ABoth are deposits because money was received by the company
  2. BDirector's amount is not a deposit, and the advance adjusted by supply within 365 days is also not a depositCorrect
  3. CThe director's amount is a deposit; the advance is not
  4. DThe advance is a deposit; the director's amount is not

Explanation

Under the Deposit Rules, the amount received from a director with a declaration that it is not borrowed from others is excluded from deposits. An advance received for supply of goods or services is also excluded if it is adjusted within 365 days from receipt. So neither is a deposit.

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