58a violation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 November 2012 Dear Experts,

If a Private Company accepts deposits other than Members, Directors or Relatives then there is violation.

But if Violation has been made then what are the consequences and what should be done?

My understandings:

1. If accepted with invitation - 43A applicable and becomes Public Co.

-- But if accepted w/o invitation then??

2. Penalty

(a) the company shall be punishable, -
(i) where such contravention relates to the acceptance of any deposit, with fine which shall not be less than an amount
equal to the amount of the deposit so accepted ;
(ii) where such contravention relates to the invitation of any deposit, with fine which may extend to 1[ten] lakh rupees
but shall not be less than 2[fifty] thousand rupees ;
(b) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend
to five years and shall also be liable to fine.

How to distinguish between (i) and (ii) where the pvt co. has accepted deposit as said above AND no invitation has been made?

3. Relief from Central Govt.

-- Is relief available from Central Govt. in case of negligence of provision of Law?(As none was knowing about the deposit by pvt. co.)

4. What should be done now? How to solve this out practically?

Thanks in advance.

Ajay Mishra

Ajay Mishra (Expert)
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02 November 2012 Hi

If accepted other than mentioned person, then it will be treated as deposit. whether you have made invitation or not.

Consequences of acceptance of deposit by Private Limited Company

If a private company acceptance an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc

Querist : Anonymous

Querist : Anonymous (Querist)

02 November 2012 If the deposits are carried forward from many years then??

Also, Sir, you have not mentioned about the Penalty and steps a company take to save itself.

Please guide on that also and thanks very much for your reply.

Querist : Anonymous

Querist : Anonymous (Querist)

03 November 2012 I also invite others to share knowledge on above.