Whether the Word Deposit used in 274 (1) (g) includes ANY deposit including deposit U/s 58A?
Whether the normal deposit accepted during normal course of business are included?
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 27 September 2010
· COMMENCEMENT OF DISQUALIFICATION
All the existing directors of a public company in default other than the directors who have been exempted from application of section 274(1)(g) by the Central Government, will be disqualified for appointment or re-appointment as director in any other public company from the date on which the default committed by the said company is deemed to crystallize into a disqualification of the directors prescribed under this section.
The date of commencement of disqualification under section 274(1)(g) is as under:
(a) For non-filing of annual accounts and annual returns: Rule 3(a) of the Disqualification Rules, provides that if a company fails to file the annual accounts and annual returns for any continuous three financial years commencing on or after the first day of April, 1999, persons who are directors on the last due date for filing the annual accounts and annual returns in respect of the last three continuous financial years, shall become disqualified under section 274(1)(g).
(b) For failure to repay deposits, etc.: Rule 3(b) of the Disqualification Rules, provides that if a company fails to repay any deposit or interest thereon, or redeem its debentures, or pay any dividend declared on the respective due dates and if such failure continues for a period for one year, all the person who have been directors on the date of expiry of one year after the default has occurred shall stand disqualified under section 274(1)(g).
It may be noted that even if a person ceased to be director of the company subsequent to the expiry of one year from the date of occurrence of the date shall stand disqualified. But if a director has resigned before the expiry of one year from the date of occurrence of the default, the disqualification will not visit him.
Explanation to Rule 3(b) clarifies that if the non-payment of dividends is due to the reasons of dividend not being claimed or dividend has been kept in a separate bank account as required under section 205A of the Companies Act, 1956 or dividend has been paid into Investor Education and Protection Fund is required under section 205C, it shall not be deemed a failure to make payment of dividend.
Jagruti (CS)
(Service)
(1953 Points)
Replied 27 September 2010
Deposits include the same meaning as UNder 58A.
Yogesh Shah
(Managing Corporate Finance)
(1051 Points)
Replied 28 September 2010
Hi Deepak,
the term ‘Deposit’ under Sec. 274(1)(g)(B) includes ANY DEPOSIT accepted by company. In normal course of business also, if company has accepted such amount as a ‘Deposit’ then it will be covered under this section.
Let it be Security Deposit from Suppliers, deposit from employees or Sec. 58A deposits etc.
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