IS this Public deposit???

This query is : Resolved

Archana (Querist)
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11 August 2010 An unlisted public ltd. say ABC Entertainment corporation Ltd. runs a channel......It accepted membership deposits by issuing advertisement in local newspaper from individuals who are niether shareholder or director in 2006 in a scheme that the channel wud play their selected program agianst their membership fees..........but till now the co. hasnt implemented this scheme n the deposits are shown as current liabilities in B/s....Also, the terms were that 1. fees is non refundable 2. the co. has right to convert the membership fees into equity shares.,,,,,,,

Is 58A applicable or is there any violation...pls suggest

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 August 2010 Prima facie it is public deposit covered under section 58A of the Companies Act,1956 since the exception as per rule (2)(b)(vi) of Companies (Acceptance of Deposit)Rules,1975 is not squarely applicable for the issue raised. Non implementation of the scheme and the two conditions of the contract cited in the issue is adding fuel to the fire.

Archana

Archana (Querist)
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12 August 2010 I appreciate ur prompt reply....but sir can u plz elaborate wht can b done now in this situation......

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