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Section 58A of Companies Act, 1956

Ekta (Practicing CS) (423 Points)

02 July 2009

Dear All,

I have one very big confusion about Section 58 A of Companies Act, 1956. is this section apply to Public Companies only?? and if deposits accepted from Corporate Sectors or companies by a Private Limited Company then is it violation of this rule?? and are the companies from which the deposits are accepted are covered in deposits from Public in case of Private Companies???

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9 Replies

Ajay Mishra (Company Secretary) (74332 Points)
Replied 02 July 2009

Dear Ms. Ekta

Definition of private company as given under Section 3(1) (iii)(d) prohibit any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

Best Regards

2 Like

RAJU (LEARNER) (1089 Points)
Replied 02 July 2009

Hi,

1) Section 58A is applicable to Public as well as Private Companies,

2) Deposits accepted by a company from another company is outside the purview as the definition of `deposit` excludes it.

3) I didn't get this.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 02 July 2009

Pl refer to Rule 2(b)(iv) of Companies (Acceptance of Deposits) Rules 1975 which excludes inter-company deposits from the definition of deposits.

Thanks

sudhir gautam (CA Final) (145 Points)
Replied 02 July 2009

Yes yor are right

MAYANK GUGLANI (CA ) (124 Points)
Replied 02 July 2009

I THINK SECTION 58A ALSO APPLIES TO PRIVATE COMPANIES

ONLY VIOLATION TO THIS SECTION IS FOR BANKUNG COMPANIES AND OTHER COMPANIES WHERE CG WITH CONSULTATION WITH RBI...

Ekta (Practicing CS) (423 Points)
Replied 02 July 2009

Thank you all for the reply, I get the point.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 03 July 2009

Section 58A applies to both Private as well as Public Companies. However in case of Private Companies deposit may only be accepted from its members, directors or their relatives.

Intercorporate deposits are not treated as deposit in terms of Rule 2(b)(iv).