Deposit - Section 58A

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2010 A closely held public Company, has accepted the deposit in year 2000 and continue to hold the same till date.

Kindly guide how we can complie with the Section 58A w.e.f. 2000.

What will be penalty for such non compliance

Rasesh

Rasesh (Expert)
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17 March 2010 From the end of seven years from the date of maturity of such deposits, they become liable to be transferred to the IEPF.

If the deposits were issued in 2000 for a period of three years i.e. maturity in 2003, then in 2010 they would be becoming due to be transferred to the IEPF. Calculate the date for yourself and if they are due to be transferred, then transfer them to IEPF.

I presume that 58A compliance was done in 2000. If you have not filed the return of Deposit, then file it with late filing fees. Since no new deposits are accepted post that date, no other compliances would be effected.

Querist : Anonymous

Querist : Anonymous (Querist)

20 March 2010 A closely held public Company, has accepted the deposit in year 2000 and continue to hold the same till date.

Kindly guide how we can complie with the Section 58A w.e.f. 2000.

What will be penalty for such non compliance

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 Section 58A of the Companies Act, 1956 deals with the acceptance of deposits by companies. If a closely held public company has accepted deposits since the year 2000 and continues to hold them, here are the key considerations and actions required:

### Compliance Requirements under Section 58A:

1. **Registration of Charge**: The company should have registered the charge created by accepting deposits with the Registrar of Companies (RoC) within 30 days of its creation, as per Section 125 of the Companies Act, 1956.

2. **Filing of Return**: The company should file a return of deposits with the RoC within 30 days from the date of commencement of the Companies (Amendment) Act, 2000 (i.e., from 13th December 2000).

3. **Maintenance of Deposit Repayment Reserve**: The company is required to create and maintain a Deposit Repayment Reserve Account and deposit at least 15% of the amount of deposits maturing during the year into this reserve.

4. **Compliance with Provisions of Section 58A**: This includes complying with the limits, conditions, and regulations prescribed under Section 58A regarding acceptance, repayment, interest, etc.

### Penalty for Non-compliance:

The penalty for non-compliance with Section 58A of the Companies Act, 1956 can be significant and may include:

- **Penalty on the Company**: The company may face penalties for failure to register the charge or file returns as required.
- **Penalty on Directors**: Directors of the company who are responsible for the non-compliance may also be penalized individually.
- **Additional Consequences**: In addition to penalties, non-compliance can lead to legal repercussions, difficulties in raising future funds, and adverse impact on the company's reputation.

### Steps to Ensure Compliance:

1. **Review Records**: Gather all documents related to the acceptance of deposits since 2000, including agreements, registers, and correspondence.

2. **Calculate and Deposit Repayment Reserve**: Calculate the required amount for the Deposit Repayment Reserve Account (15% of deposits maturing during each financial year) and ensure it is deposited.

3. **File Necessary Returns**: File overdue returns with the RoC for the period starting from December 2000 onwards.

4. **Consultation with Legal Experts**: Seek advice from legal experts specializing in corporate law to ensure all compliance requirements are met and to assess any potential liabilities or penalties.

### Conclusion:

It is crucial for the closely held public company to promptly address the non-compliance with Section 58A of the Companies Act, 1956. Timely action, including filing necessary returns, creating the Deposit Repayment Reserve, and seeking legal advice, will help mitigate potential penalties and ensure compliance with regulatory requirements.