Fixed deposits

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Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2012 What r consequences if the liquid assets @15% is not maintained by Company with in 30April.

CA Kishore Tallam

CA Kishore Tallam (Expert)
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12 April 2012 No Consequences. About which type of company u r referring here??

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2012 referring company is public listed company and accepting deposits from public.

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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25 July 2024 For a public listed company accepting deposits from the public in India, maintaining liquid assets is crucial as per regulatory requirements under the Companies Act, 2013 and the rules framed thereunder. Here are the consequences if the company fails to maintain the prescribed liquid assets:

1. **Penalty**: The company may be liable to pay a penalty for non-compliance. As per Section 73 of the Companies Act, 2013, if a company fails to comply with the requirements regarding the maintenance of liquid assets, it shall be punishable with a fine which shall not be less than one crore rupees but which may extend to ten crore rupees.

2. **Restriction on Acceptance of Deposits**: The company may be restricted from accepting further deposits from the public until it rectifies the non-compliance and meets the prescribed requirements.

3. **Director's Responsibility**: Directors of the company who are responsible for compliance may face disqualification or other legal actions if found to be in violation of the regulations.

4. **Legal Proceedings**: Non-compliance can lead to legal proceedings initiated by regulatory authorities such as the Registrar of Companies (RoC) or the Ministry of Corporate Affairs (MCA).

5. **Impact on Reputation**: Non-compliance with regulatory requirements can harm the company's reputation and erode investor confidence, affecting its ability to raise funds and operate smoothly.

### Regulatory Compliance:

- The specific requirements for maintaining liquid assets are detailed in Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014. It mandates that companies accepting deposits must maintain a minimum of 15% of the amount of deposits maturing during the financial year and the next financial year up to April 30th, in specified liquid assets.

- These liquid assets typically include cash, bank deposits, government securities, or other securities approved by the Reserve Bank of India (RBI).

### Action Plan:

If a company finds itself unable to maintain the required liquid assets by the specified deadline (April 30th), it should immediately take corrective actions, which may include:

- **Raising Funds**: Obtain loans or additional capital to increase liquid assets.
- **Liquidation of Assets**: Sell non-liquid assets to generate cash.
- **Negotiation with Creditors**: Negotiate with creditors to reschedule payments to improve liquidity.
- **Compliance Reporting**: Report the non-compliance and corrective actions to regulatory authorities to mitigate penalties.

In conclusion, maintaining the prescribed liquid assets is not just a regulatory requirement but also essential for financial stability and compliance. Companies must proactively manage their liquidity to avoid penalties, legal repercussions, and adverse impacts on their business operations and reputation.