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acceptance of deposit rules, 1975

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(Querist)
05 March 2010 can a private limited company issue unsecured debentures to its shareholders, the amount exceeds 10% of its paid up capital and reserves?
If it can, whether the cap of 12.5% interest is applicable on the debentures so issued?
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Rasesh

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Rasesh (Expert)
05 March 2010 A Private Limited company can issue deposits to only shareholders, members and their relatives.

Moreover, Unsecured Debentures do not fall under the category of exempted deposits.

In my view, a private limited company cannot issue unsecured debentures to its shareholders.

Assuming the Company to be a public limited company, the cap of 12.5% would be applicable on the unsecured debentures.
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Ankur Garg

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Ankur Garg (Expert)
05 March 2010 As per my opinion a pvt. company can issue unsecured debenture to its shareholders.

Further as per my opinion a pvt. company can accept deposit from its shareholders or directors.
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