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

Under the Companies Act, 2013, a company other than a banking company or NBFC wants to accept deposits from its members. Which of the following is a condition that the Act itself requires for such acceptance?

A company accepting deposits from its members must pass a resolution in general meeting and issue a circular to members containing the financial position, credit rating and details of earlier deposits. A Board resolution alone is not enough, and no RBI or Tribunal approval is required for each deposit.

  1. APassing a resolution in general meeting and issuing a circular to membersCorrect
  2. BPassing a Board resolution by circulation only, without any circular
  3. CObtaining prior approval of the Reserve Bank of India for each deposit
  4. DObtaining an order of the Tribunal before inviting deposits

Explanation

Section 73(2) allows a company to accept deposits from its members subject to a resolution in general meeting, issue of a circular to members with prescribed particulars, and filing the circular with the Registrar. A Board resolution alone is therefore insufficient. Neither RBI approval per deposit nor Tribunal order is a condition in the section.

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