Acceptance of deposits

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Sathyan Avinash (Querist)
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25 June 2012 Dear Experts,

Kind Attn : Mr. Ankur Garg

I see many companies offering attractive returns on moneys collected by them (they say that the money invested will double in 5 years to be exact).

One such company's representatives persuaded me to make an investment decision and hence i did some due diligence work on the Company on the MCA -21 portal.

I was shocked to find that in the Auditors Report, the Auditor has stated that the Company has not accepted any deposits under section 58A of the Companies Act, 1956 ( I personally know some people who have been investing in that company for about 3 years as a Recurring Deposit of Rs 1000 per month).

On scrutiny of all the available data of the Company in the MCA -21 site, I found that the Company in its financial statements, never expressed its intention to accept public deposits.

Further the reason why the Company became popular among the people was that the commission it offered to one who collected the deposit.

Now let me ask you one thing, what is the fate of those who invested in the Company ?

Is there any competent authority to whom an official complaint can be lodged so as to protect the investors interest before it becomes a case of embezzlement of public money ?

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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26 June 2012 Dear Sathyan,

Generally, Auditors used to write that During the year no Deposit was accepted or renewed from public within the meaning of section 58A.

It usually represent that DURING THE YEAR no deposit was accepted.

No deposit was accepted from PUBLIC.

In case of Private Company Deposit Rules are not applicable so, deposits are classified as Unsecured Loans.

Private Companies can offer rate of loan as they want.

otherwise a company wherein Acceptance of Deposit Rules are applicable can only offer 12.5% per annum.

Sathyan Avinash

Sathyan Avinash (Querist)
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12 July 2012 Dear Sir,

On further observation of the balance sheet i found that there are no amounts opposite the head Secured and Unsecured Loans.

Please clarify.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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12 July 2012 If there is loan or deposit, the amount must reflect in the secured or unsecured loan.

Sathyan Avinash

Sathyan Avinash (Querist)
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12 July 2012 That is precisely my doubt about the credibility of the Company.

But i surely know at least 25 people from whom the Company is collecting Rs 500 each month.

Please let me know the forums to which i can raise a query so as to prevent any misembezzlement of funds.

Thanks in advance.

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