12th SP Chapter 5 Exercise (Deposits) – Maharashtra Board – Free Solution
Table of Contents
12th SP Chapter 5 Exercise
Chapter 5
Deposits
Q.1 A) Select the correct answer from the options given below and rewrite the statements.
1) Deposit is a type of _____.
a) Owned capital
b) Short-term loan
c) Long term loan
2) Eligible public companies and Government companies can collect deposits from _____.
a) Its employees
b) Public
c) RBI
3) Private company can accept deposits from its member or Directors upto not more than _____ % of its aggregate of paid-up share capital and free reserves.
a) 100
b) 35
c) 25
4) A _____ Company can accept deposits from public not exceeding 35% of its paid-up share Capital and free reserves.
a) Government
b) Private
c) Eligible Public
5) Deposit can be accepted for a minimum of 6 months and maximum for _____.
months.
a) 36
b) 3
c) 30
6) Company issues _____ to invite its members to subscribe for its deposit scheme.
a) Advertisement
b) Circular
c) Newspaper
7) Company can issue circulars or advertisements for inviting deposits after _____ days of filing it with Registrar of Companies.
a) 30
b) 21
c) 7
8) Company has to appoint _____ to protect the interest of depositors.
a) Debenture Trustees
b) Deposit Trustees
c) Credit Rating Agency
9) Charge on assets is to be created when a company issues _____.
a) Unsecured deposit
b) Unsecured Debenture
c) Secured deposit
10) Deposit Receipt is issued within _____ days of receipt of deposit.
a) 7
b) 30
c) 21
11) For premature repayment of deposit, company deducts _____ % of interest.
a) 1
b) 18
c) 20
12) Return of deposit must be filed every year on or before _____.
a) 30th June
b) 31st March
c) 30th April
Q.1 B) Match the pairs.
| Group A | Group B |
| a) Private Company | 1) 10% of aggregate of paid-up share capital + free reserves |
| b) Deposit Trust Deed | 2) Signed at least 7 days before issuing advertisement |
| c) Secured Deposit | 3) Maximum 30 months |
| d) Tenure of deposit | 4) Charge on tangible assets |
| e) Return of Deposit | 5) 100% aggregate of paid-up share capital + free reserves |
| 6) File on or before 31st March every year | |
| 7) Signed 21 days after issuing advertisement | |
| 8) Maximum 36 months | |
| 9) Charge on intangible assets | |
| 10) File on or before 30th June every year |
Answers.
a. 5) 100% aggregate of paid-up share capital + free reserves
b. 2) Signed at least 7 days before issuing advertisement
c. 4) Charge on tangible assets
d. 8) Maximum 36 months
e. 10) File on or before 30th June every year
Q.1 C) Write a word or a term or a phrase which can substitute each of the following statements.
1) A company which can accept deposits from its members, directors or their relatives not exceeding 100% of aggregate of paid up share capital and free reserves.
Ans: Private Company
2) Company which can accept deposits from public up to 35% of its paid-up share capital and free reserves.
Ans: Government Company
3) Minimum tenure of a deposit.
Ans: 6 Months
4) Maximum tenure of a deposit.
Ans: 36 Months
5) Period within which a company has to create a charge on its tangible assets.
Ans: Within 30 days of acceptance of deposits
6) Document issued b a company to invite its members to subscribe for its Deposits.
Ans: Circular
7) Agreement between company and Deposit Trustee.
Ans: Deposit Trust Deed
8) Account that can be used only for repaying deposits.
Ans: Deposit Repayment Reserve Account
9) Time within which company has to issue deposit Receipt.
Ans: Within 21 days from date of receipt of deposit
10) Book which contains details of deposits accepted or renewed.
Ans: Register of Deposit
Q.1 D) State whether the following statements are true or false.
1) Return of deposit must be filed every year on or before 31st March.
Ans: False
2) Eligible public company can collect deposits from its members.
Ans: True
3) Government company can collect deposits from its members.
Ans: False
4) A private company can collect deposits from public.
Ans: False
5) Deposit can be accepted for a maximum of 36 months.
Ans: True
6) Eligible public company can collect deposits from public not exceeding 35% of its paid-up share capital and free reserves.
Ans: False
7) For secured deposits, company has to create a charge on its tangible assets.
Ans: True
8) Deposit Receipt is issued within 21 days of receipt of deposits.
Ans: True
9) Company appoints Credit Rating Agency to protect the interest of depositors.
Ans: False
10) Deposit Trust Deed is an agreement between company and Deposit Trustee.
Ans: True
Q.1 E) Find the odd one.
1) Private company, Eligible public company, Government company.
2) Deposit Trustee, Deposit Trust Deed, Special Resolution.
3) Appointment of Deposit Trustee, Appointment of Registrar of companies, Appointment of Credit Rating Agency.
Balbharti Textbook Solutions for other subjects
Solution of all Chapters of SP
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8 – 9 – 10 – 11 – 12
Q.1 F) Complete the sentences.
1) Deposit is a type of Short term loan.
2) Eligible Public company and Govt. Company can accept deposits from Public.
3) To collect deposits from public, Eligible public company must have a net worth of not less than Rs 100 Crores.
4) A Government company can accept deposits from public not exceeding 35% of its paid-up share capital and free reserves .
5) Deposits can be accepted or renewed for a period not less than 6 months and not more than 36 Months .
6) Company cannot accept or renew deposits repayable on demand .
7) Premature repayment of deposits can be done b a company but not before 3 Months.
8) To invite the public to subscribe for its deposits, a company issues advertisement.
9) Agency which gives ratings of the deposits of a company is called Credit Rating Agency.
10) Account which is used only for repaying deposits is called Deposit Repayment Reserve Account.
Q.1 G) Select the correct option from the bracket.
| Group A | Group B |
| a) Government Company | 1) Deposits from public |
| b) Private Company | 2) Deposits from members |
| c) 36 months | 3) Maximum tenure of deposits |
| d) Secured deposits | 4) Charge on tangible assets |
| e) Return of deposit | 5) File on or before 30th June |
Q.1 H) Answer in one sentence.
1) Which companies can accept deposits from public?
Answer: Eligible Public company and Govt. Company can accept deposits from Public.
2) What is the maximum deposit the Government company can collect?
Answer: A Government company can accept deposits from public not exceeding 35% of its paid-up share capital and free reserves.
3) What is the tenure of a deposit?
Answer: Deposits can be accepted for a period, not less than 6 months and not more than 36 Months.
4) Who are Deposit Trustees?
Answer: Deposit Trustees protect the interest of the depositor in case a company defaults in repaying the depositors.
5) What is Deposit Trust Deed?
Answer: An agreement between the deposit trustee and company is called a Deposit Trust Deed.
6) When does a company create charge on its tangible assets?
Answer: A company create a charge on its tangible assets while issuing secured deposits.
7) Within what period should a company issue Deposit Receipt?
Answer: Deposit Receipt is issued within 21 days of receipt of deposits.
8) When should a company file Return of Deposit?
Answer: Return of deposit must be filed every year on or before 30th June.
9) What is Deposit Repayment Reserve Account?
Answer: Every company accepting deposits, has to open a Deposit Repayment Reserve Account in a scheduled Bank. Every year, on or before 30th April, company has to deposit an amount not less than 15% of the amount
of deposits maturing during the current year and following financial year. This account can be used only for repaying deposit.
10) What is Register of Deposit?
Answer: A company has to maintain a separate Register for deposits accepted or renewed at its registered office. The details of the deposit along with the details of the depositors should be entered in the Register of Deposits within seven days from the date of issue of Deposit Receipt.
Q.1 I) Correct the underlined word/s and rewrite the following sentences.
1) Government Company can accept deposit from members.
Answer: Public
2) Company issues advertisement to invite its members for subscribing to its deposits.
Answer: Circular
3) Company appoints Credit Rating Agency to protect the interest of Depositors.
Answer: Deposit Trustees.
4) Deposit Receipt is issued within seven days from date of receipt of deposits.
Answer: Twenty-one days.
5) Register of deposits is to be filed with the Registrar of companies on or before 30th June every year.
Answer: Return of Deposit
6) Charge on assets is created when company issues unsecured deposit.
Answer: Secured
7) Minimum tenure of deposit is 36 months.
Answer: 6
Q.1 J) Arrange in proper order
1)
a. Appoint Deposit Trustee.
b. Hold General Meeting.
c. Create charge on assets.
Answer: (b) Hold General Meeting (a) Appoint Deposit Trustee (c) Create charge on assets
2)
a. File Return of deposit
b. Issue Deposit Receipt
c. Issue advertisement.
Answer: (c) Issue advertisement (b) Issue Deposit Receipt (a) File Return of deposit
3)
a. Obtain Credit Rating.
b. Entries in Register of Deposits.
c. Issue Deposit Receipt.
Answer: (a) Obtain Credit Rating (c) Issue Deposit Receipt (b) Entries in Register of Deposits
Q.2 Explain the following terms/concepts.
1) Eligible Public Company
Answer: These companies can accept deposits from their members and also from the public. Eligible public company means a company having :
a) A Net worth of not less than Rs 100 crores or,
b) Turnover of not less than Rs 500 crores and which has obtained prior approval of its shareholders through special resolution for accepting public deposits.
2) Tenure of Deposit
Answer: a) No deposit can be accepted or renewed which is to be repaid within a period of six months or more than thirty-six months.
b) In certain circumstances, a company may accept deposits repayable earlier than six months to meet its short-term needs.
c) Such deposits must have a tenure of minimum three months and the amount of such deposits cannot be more than 10% of aggregate of the paid-up share capital and free reserves of the company.
3) Secured Deposit
Answer: a) A company can accept secured or unsecured deposit which should be clearly mentioned in the circular or advertisement inviting deposits.
b) If a company offers secured deposits, it has to create a charge on its tangible assets within 30 days of acceptance of deposits.
c) When issuing secured deposits, eligible companies and public companies have to appoint one or more Deposit Trustees.
d) A company accepting secured deposit from public, within thirty days of acceptance, has to create a charge on its tangible assets for an amount not less than the amount of deposit accepted.
4) Deposit Trustee
Answer: a) When issuing secured deposits, eligible companies and public companies have to appoint one or more Deposit Trustees.
b) The Trustees protect the interest of the depositor in case a company defaults in repaying the depositors.
Company signs a contract with the Deposit Trustees called as Trust Deed. It contains the terms and conditions of the contract.
c) The deed has to be signed at least 7 days before issuing the circular or advertisement.
5) Charge on tangible assets
Answer: a) A company accepting secured deposit from public, within thirty days of acceptance, has to create a charge on its tangible assets for an amount not less than the amount of deposit accepted.
b) The minimum amount of security should be equal to the amount not covered b Deposit Insurance.
c) The Security is created in favour of the Deposit trustees.
6) Deposit Insurance
Answer: a) A company needs to take Deposit Insurance at least 30 days before issue of circular or an advertisement.
b) If the amount of Deposit plus interest on it is up to Rs 20,000, insurance is to be taken.
7) Deposit Repayment Reserve Account
Answer: a) Every company accepting deposits, has to open a Deposit Repayment Reserve Account in a scheduled Bank.
b) Every year, on or before 30th April, company has to deposit an amount not less than 15% of the amount
of deposits maturing during the current year and following financial year.
c) This account can be used only for repaying deposit.
8) Credit Rating
Answer: a) Every company has to get credit rating of its deposits and include the ratings in the circular or advertisement.
b) The Credit Rating Agency considers the net worth of the company, liquidity position, ability to repay deposits on time, etc., and accordingly gives a rating.
c) Rating shall be obtained every year during the tenure of the deposits.
9) Deposit Receipt
Answer: Company has to issue Deposit Receipt to the depositors within twenty-one (21) days from date of receipt of money or realization of cheque.
b) The receipt has to be signed b the officer duly authorized b the Board of Directors.
c) The Receipt contains the name and address of the depositor, amount of deposit, rate of interest payable and
date on which it is repayable.
10) Return of Deposit
Answer: a) A company has to file, on or before 30th June every year, with the Registrar of Companies a Return of Deposit.
b) The Return gives details of deposit with the company as on 31st March of that year.
Balbharti Textbook Solutions for other subjects
Solution of all Chapters of SP
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8 – 9 – 10 – 11 – 12
Q.3 Study the following case/situation and express your opinion.
(1) Apple Company Ltd. plans to raise funds through Public Deposits. It’s net worth is Rs 10 Crores :
a) Can they accept deposits from the public?
Answer: No, the company cannot accept deposits from the public because their net worth is only Rs 10 Crore, and to become eligible their net worth should not be less than Rs 100 crores.
b) Can they accept deposits which matures after 4 years.
Answer: No, the public company can accept deposits for a tenure of minimum of 6 months and maximum of 36 months only.
c) Within what period should the company issue deposit Receipt to it’s depositors?
Answer: Company has to issue Deposit Receipt to the depositors within twenty-one (21) days from date of receipt of money or realization of cheque.
(2) ABC Company Ltd. is an eligible Public Company as per the Companies Act, 2013 with reference to accepting Public Deposits :
a) Can the company accept deposits in joint names?
Answer: Yes, the company can accept deposits in joint names but there should not be more than three names.
b) Can the company accept deposits from it’s members?
Answer: Yes, the company is eligible as per the Companies Act 2013 and therefore it can accept deposits from its members.
c) Can the company issue secured deposits?
Answer: Yes, the company can issue secured deposits by creating charge over their tangible assets.
(3) Apple Company Ltd. is an eligible Public Company. It plans to raise secured deposits from the public. Please advice its Board on the following :
a) Does the company need to get shareholders approval for accepting deposits?
Answer: Yes, the company needs to get shareholder’s approval for accepting deposits. For this, board of directors can pass resolutions in general meetings for the approval of accepting deposits.
b) Does the company have to appoint a Deposit Trustee?
Answer: Yes, the company has to appoint a Deposit Trustee. because if a company wants to raise funds through secured deposit, then it is compulsory to appoint a debenture trustee.
c) Within what period should the company create a charge on its assets?
Answer: A company has to create a charge on its tangible assets within 30 days.
(4) SUN Pvt. Ltd. company wants to raise funds through deposits :
a) Can the company accept deposits from the public?
Answer: No, the company cannot accept deposits from the public. because Sun Pvt. Ltd. is a private company and it cannot accept deposit from public. Only eligible Public company and Govt. Company can accept deposits from Public.
b) Which document should the company issue to invite deposits?
Answer: Sun Pvt. Ltd. is a private company. therefore it should issue a circular to invite deposits from its members.
c) What is the maximum period for which they can accept deposits?
Answer: The maximum period for which they can accept deposits is 36 months.
Q.4 Answer in brief.
1) State the amount of deposits that different types of companies can collect by way of deposits.
Answer: Public deposit is an important source of financing short-term requirements of company. Companies receive fixed deposits from the public for a period ranging from 6 months to 36 months. Such deposits are called as Public Deposits.
A) Private Company
1) A Private Company can accept deposits from its members or Directors or Relatives of Directors not more than 100 percent of its aggregate of paid-up share capital and free reserves.
2) However, certain class of Private Companies as specified b the Companies Act, can accept deposits more than 100 percent of its aggregate of paid-up share capital and free reserves.
B) Public Company (other than Eligible Company):
These Companies cannot accept fresh deposits from members if the amount of such deposits together with the previous deposits exceeds 25% of the aggregate of the paid-up share capital and free reserves of the company.
C) Eligible Public Company:
From the Members – Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 10% of aggregate of paid-up share capital and free Reserves.
From Public – Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 25% of aggregate of paid-up share capital and free Reserves.
D) Government Company:
They can accept deposits from public not exceeding 35% of the paid-up share capital and free reserves of the company.
2) State the contents of circular or Advertisement for Deposit.
Answer: If a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, company has to issue an advertisement.
a) Contents of circular or advertisement:
i) Statement about the financial position of the company
ii) The portion of secured and unsecured deposit of fresh issue
iii) Credit rating obtained from a Credit Rating Agency (only for eligible public company)
iv) Details of the scheme
v) Name of Deposit Trustees
vi) Amount due towards deposits of any previous deposits accepted by company.
b) Filing of circular or advertisement with Registrar of Companies:
The company has to file a copy of circular or Advertisement signed by all directors with the Registrar of Companies.
c) Issue of circular or Advertisement:
Only after 30 days of filing a copy of circular or Advertisement with the Registrar of Companies, the company can issue the circular or advertisement.
The company can send the circular to the members through registered post, speed post or as email.
To invite the public, company has to publish the advertisement in one English newspaper and one vernacular newspaper having wide circulation in the state where the company’s registered office is located.
d) Validity of circular or advertisement:
The circular or advertisement is valid for 6 months from the end of the financial year in which it was issued or the date on which the Annual General Meeting was held, whichever is earlier.
3) State the provisions regarding appointment of Deposit Trustee.
Answer:
Following are the provisions regarding appointment of Deposit Trustee:
a) When issuing secured deposits, eligible companies and public companies have to appoint one or more Deposit Trustees.
b) The Trustees protect the interest of the depositor in case a company defaults in repaying the depositors.
c) Company signs a contract with the Deposit Trustees called as Trust Deed. It contains the terms and conditions of the contract.
d) The deed has to be signed at least 7 days before issuing the circular or advertisement.
e) The Deposit Trustee on its own or on the request of one tenth of depositors, can call a meeting of all depositors when a company defaults in repaying deposits.
4) State any four terms and conditions regarding acceptance of Deposit.
Answer:
Following are the terms and conditions regarding acceptance of Deposit:
1)Application Form:
A company has to provide an application form. It should contain a declaration by the applicant that the deposit he is making is not made out of any money borrowed by him from another person.
2)Joint names:
Compan can accept deposits in joint names of depositors. But there should not be more than 3 names.
3) Nomination:
Every depositor at any time, has the right to nominate any person as nominee in the event of death of the depositor.
4) Appointment of Deposit Trustee:
When issuing secured deposits, eligible companies and public companies have to appoint one or more Deposit Trustees. The Trustees protect the interest of the depositor in case a company defaults in repaying the depositors. Company signs a contract with the Deposit Trustees called as Trust Deed. It contains the terms and conditions of the contract. The deed has to be signed at least 7 days before issuing the circular or advertisement.
5) Create charge on assets:
A company accepting a secured deposit from public, within thirty days of acceptance, has to create a charge on its tangible assets for an amount not less than the amount of deposit accepted. The minimum amount of security should be equal to the amount not covered by Deposit Insurance.
The Security is created in favour of the Deposit trustees.
6) Deposit Insurance:
A company needs to take Deposit Insurance at least 30 days before issuing circular or advertisement. If the amount of Deposit plus interest on it is up to Rs 20,000, insurance is to be taken.
7) Obtain credit rating:
Every company has to get a credit rating for its deposits and include the ratings in the circular or advertisement. The Credit Rating Agency considers the net worth of the company, liquidity position, ability to repay deposits on time, etc., and accordingly gives a rating. The rating shall be obtained every year during the tenure of the deposits.
Q.5 Justify the following statements.
1) All companies cannot accept deposits from public.
Answer:
a) A private company can accept deposit from its members or Directors or relatives of Directors.
b) Public Company (Other than eligible company) can accept deposits from its members or directors.
c) Eligible Public Company can accept deposits from their members and also from the public. Eligible public company means a company having :
i) A Net worth of not less than 100 crores or,
ii) Turnover of not less than 500 crores and which has obtained prior approval of its shareholders through special resolution for accepting public deposits.
2) There is a limit or restriction on the amount that a company can collect as Deposits.
Answer:
A) Private Company:
1) A Private Company can accept deposits from its members or Directors or Relatives of Directors not more than 100 percent of its aggregate of paid-up share capital and free reserves.
2) However, certain class of Private Companies as specified by the Companies Act, can accept deposits more than 100 percent of its aggregate of paid-up share capital and free reserves.
B) Public Company (other than Eligible Company): These Companies cannot accept fresh deposit from members if the amount of such deposits together with the previous deposits exceeds 25% of the aggregate of the paid-up share capital and free reserves of the company.
C) Eligible Public Company:
From the Members – Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 10% of aggregate of paid-up share capital and free Reserves.
From Public – Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 25% of aggregate of paid-up share capital and free Reserves.
D) Government Company: They can accept deposits from public not exceeding 35% of the paid-up share capital and free reserves of the company.
3) Company has to fulfill certain provisions related to issue of circular or advertisement.
Answer:
a) If a company invites deposits from its members, it issues a circular. But if it invites deposits from the public, company has to issue an advertisement.
b) Company has to file a copy of circular or Advertisement signed by all directors with the Registrar of Companies.
c) Only after 30 days of filing a copy of a circular or Advertisement with the Registrar of Companies, the company can issue the circular or advertisement.
e) Thus it is rightly justified that the company has to fulfill certain provisions related to issue of circular or advertisement
4) While issuing secured deposits, company has to appoint Deposit Trustee.
Answer:
a) When issuing secured deposits, eligible companies and public companies have to appoint one or more Deposit Trustees.
b) The Trustees protect the interest of the depositor in case a company defaults in repaying the depositors.
Company signs a contract with the Deposit Trustees called as Trust Deed. It contains the terms and conditions of the contract.
c) The deed has to be signed at least 7 days before issuing the circular or advertisement.
d) Thus it is rightly justified that, While issuing secured deposits, company has to appoint Deposit Trustee.
5) Companies have to create a charge on their tangible assets while issuing secured deposits.
Answer:
a) A company accepting secured deposit from public, within thirty days of acceptance, has to create a charge on its tangible assets for an amount not less than the amount of deposit accepted.
b) The minimum amount of security should be equal to the amount not covered by Deposit Insurance.
c) The Security is created in favour of the Deposit trustees.
d) Thus it is rightly justified that, Companies have to create a charge on their tangible assets while issuing secured deposits.
6) Company issuing deposit must open Deposit Repayment Reserve Account.
Answer:
a) Every company accepting deposits, has to open a Deposit Repayment Reserve Account in a scheduled Bank.
b) Every year, on or before 30th April, company has to deposit an amount not less than 15% of the amount
of deposits maturing during the current year and following financial year.
c) This account can be used only for repaying deposits.
d) Thus it is rightly justified that, Company issuing deposit must open Deposit Repayment Reserve Account.
Q.6 Answer the following questions.
1) Explain the type of companies that can raise deposits along with the maximum amount they can raise as deposits.
Answer: For the answer refer to Q.No 4 (1).
2. Explain the provisions related to circular or advertisements for inviting deposits.
Answer: For the answer refer to Q.No 4 (2).
Balbharti Textbook Solutions for other subjects
Solution of all Chapters of SP
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8 – 9 – 10 – 11 – 12
12th Commerce SP Textbook Solution
| Chapter Name | Solution Link |
| 1) Introduction to Corporate Finance | Click Here |
| 2) Sources of Corporate Finance | Click Here |
| 3) Issue of Shares | Click Here |
| 4) Issue of Debentures | Click Here |
| 5) Deposits | Click Here |
| 6) Correspondence with Members | Click Here |
| 7) Correspondence with Debenture holders | Click Here |
| 8) Correspondence with Depositors | Click Here |
| 9) Depository System | Click Here |
| 10) Dividend Interest | Click Here |
| 11) Financial Market | Click Here |
| 12) Stock Exchange | Click Here |
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