1.

Justify the following statement.Companies have to create a charge on their tangible assets while issuing secured deposits.

Answer»
  • A Company accepting a secured deposit from the public, within thirty days of acceptance, has to create a charge on its tangible assets for an amount not less than the amount of deposit accepted.
  • The chargeable asset amount should not be less than the amount of deposit accepted.
  • The minimum amount of security should be equal to the amount not covered by Deposit Insurance.
  • The Security is created in favour of the Deposit trustees.
  • Creating a charge on the assets ensures safety to the deposits of deposit holders.
  • In case a company fails to repay the number of deposits, the deposit holders can sell the assets and recover the amount invested.
  • Thus, it is rightly justified that the companies have to create a charge on their tangible assets while issuing secured deposits.


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