Acceptance of Deposits by Companies
Apex Engineering Limited, an unlisted public company with a paid-up share capital of Rs. 10 crore and free reserves of Rs. 5 crore, wants to raise funds to expand its operations. On 1st June 2025, the company issued a circular to its members inviting deposits for a tenure of 24 months. The company intends to accept deposits amounting to Rs. 6 crore from its members. As of 31st May 2025, the company had no outstanding deposits. To secure the deposits, the company created a charge on its manufacturing plant in favour of the deposit trustee on 15th June 2025. The total value of deposits invited (Rs. 6 crore) is secured by the asset whose market value was assessed at Rs. 5.5 crore by a registered valuer. Mr. Raman, a director of the company, provided a loan of Rs. 20 lakh to the company on 10th July 2025 out of his own funds, declaring that it was not given out of funds acquired by him by borrowing or accepting loans or deposits from others. The board of directors is unsure about the limits prescribed under the Companies Act, 2013, the requirement of security creation, and the classification of the loan received from Mr. Raman.
