Question:
Justify the following statement: Company has to fulfill certain provisions relating to issue of circular or advertisement.
Justify the following statement: Company has to fulfill certain provisions relating to issue of circular or advertisement.
Show Hint
When a company asks the public for deposits, it must issue an advertisement like a detailed brochure. This brochure must be filed with the ROC first, contain all true financial facts, and be published widely.
Updated On: Sep 12, 2025
Hide Solution
Verified By Collegedunia
Solution and Explanation
This statement is correct. When a company intends to invite public deposits from its members or the public, it is legally required under the Companies Act, 2013, to issue a circular or an advertisement. This document provides essential information to potential investors. The company must strictly adhere to the following provisions:
Contents of Advertisement: The circular must be detailed and transparent. It must contain the financial position of the company, the portion of deposits guaranteed, the credit rating obtained from a recognized agency, the names of Deposit Trustees, and details of the deposit scheme.
Filing with Registrar of Companies (ROC): A copy of the circular or advertisement, signed by a majority of the company's directors, must be filed with the ROC before it is circulated to the public.
Issuing the Advertisement: The advertisement must be published in one leading English newspaper and one vernacular newspaper having wide circulation in the state where the company's registered office is located.
Validity: A circular or advertisement remains valid for six months from the end of the financial year in which it was issued or until the date on which the Annual General Meeting was held, whichever is earlier. A fresh advertisement is required for any new deposit scheme.
Fulfilling these provisions ensures that potential depositors are well-informed and their interests are protected, making the process transparent and compliant with the law.
Contents of Advertisement: The circular must be detailed and transparent. It must contain the financial position of the company, the portion of deposits guaranteed, the credit rating obtained from a recognized agency, the names of Deposit Trustees, and details of the deposit scheme.
Filing with Registrar of Companies (ROC): A copy of the circular or advertisement, signed by a majority of the company's directors, must be filed with the ROC before it is circulated to the public.
Issuing the Advertisement: The advertisement must be published in one leading English newspaper and one vernacular newspaper having wide circulation in the state where the company's registered office is located.
Validity: A circular or advertisement remains valid for six months from the end of the financial year in which it was issued or until the date on which the Annual General Meeting was held, whichever is earlier. A fresh advertisement is required for any new deposit scheme.
Fulfilling these provisions ensures that potential depositors are well-informed and their interests are protected, making the process transparent and compliant with the law.
Was this answer helpful?
0
0
Top Questions on Corporate Law
- Answer the following question: Explain the procedure for allotment of shares.
- Distinguish between: Final Dividend and Interim Dividend
- Answer in brief: State the provisions relating to Bonus Shares.
- The Supreme Court of India has pointed out that there are not less than 100 instances under the Income Tax Act, 1961, where in the event of amalgamation, the method of treatment of a particular subject matter is expressly indicated in the provisions of the Act. In some instances, amalgamation results in withdrawal of a special benefit (such as an area exemption under Section 80IA) because it is entity or unit specific.
In the case of carry forward of losses and profits, a nuanced approach has been indicated. All these provisions support the idea that the enterprise or the undertaking, and the business of the amalgamated company continues. The beneficial treatment, in the form of set-off, deductions (in proportion to the period the transferee was in existence, vis-à-vis the transfer to the transferee company); carry forward of loss, depreciation, all bear out that under the Act:
- the business — including the rights, assets and liabilities of the transferor company — do not cease, but continue;
- by deeming fiction through several provisions of the Act, the treatment of various issues is such that the transferee is deemed to carry on the enterprise as that of the transferor.
- CLAT PG - 2022
- Legal Studies
- Corporate Law
Questions Asked in Maharashtra Class XII exam
- Write short notes: British East India Company:
- Maharashtra Class XII - 2025
- European Imperialism
- State the formula for magnetic induction produced by a current in a circular arc of a wire. Hence find the magnetic induction at the centre of a current carrying circular loop.
- Maharashtra Class XII - 2025
- Magnetic Field due to a Current Element
- Prepare an ‘Appeal’ on the topic ‘Women’s Security and Safety’ with the help of the following points: (100/150 words)
— Respect women’s rights
— Safety measures and support systems
— Collective responsibility
— Government initiatives
- Maharashtra Class XII - 2025
- Writing Skills
- Answer the following questions: % Question (i) Write the negation of the statement: \( \exists n \in \mathbb{N} \) such that \( n + 8 > 11 \).
- Maharashtra Class XII - 2025
- Quantifiers and Negation
- Derive the relation between half life and rate constant for a first order reaction.
- Maharashtra Class XII - 2025
- Chemical Kinetics
View More Questions