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

Sundaram Textiles Ltd, an unlisted public company, wishes to accept deposits from the public. Under the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, which instrument must the company issue to invite deposits from its members or the public?

A company inviting deposits must issue a circular, or a circular in the form of advertisement, containing the prescribed particulars. A prospectus, stock exchange letter of offer or private placement offer letter is not the document prescribed for inviting deposits under the Deposit Rules.

  1. AA prospectus filed with SEBI
  2. BA circular or a circular in the form of advertisementCorrect
  3. CA letter of offer filed with the stock exchange
  4. DA private placement offer letter in Form PAS-4

Explanation

The Deposit Rules require a company inviting deposits to issue a circular (to members) or a circular in the form of advertisement (to the public) with the prescribed particulars. A prospectus is for offering securities, and PAS-4 is for private placement, so they are not the deposit invitation instrument.

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