Corporate and Other LawsQuestion 5398 of 221
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1. Advise ABC Publications Limited regarding the amount and the interest that can be repaid to Mr. Y:

Options

AThe company cannot make premature repayment of the deposits.
BThe company can prematurely repay the deposit along with interest @ 10% for a period of 13 months (1st May 2021 to 31thMay 2022)
CThe company can prematurely repay the deposit along with interest @ 9% for a period of 13 months (1st May 2021 to 31st May 2022)
DThe company can prematurely repay the deposit along with interest @ 9% for a period of 11 months (1st May 2021 to 31st March 2022)
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Correct Answer

Option AThe company cannot make premature repayment of the deposits.

All Options:

  • AThe company cannot make premature repayment of the deposits.
  • BThe company can prematurely repay the deposit along with interest @ 10% for a period of 13 months (1st May 2021 to 31thMay 2022)
  • CThe company can prematurely repay the deposit along with interest @ 9% for a period of 13 months (1st May 2021 to 31st May 2022)
  • DThe company can prematurely repay the deposit along with interest @ 9% for a period of 11 months (1st May 2021 to 31st March 2022)

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Detailed Solution & Explanation

Under Rule 15 of the Companies (Acceptance of Deposits) Rules, 2014, a company is permitted to make a premature repayment of deposits after the expiry of six months from the date of acceptance.
The rate of interest payable on such premature repayment shall be reduced by 1%\displaystyle 1\% from the rate which the company would have paid had the deposit been accepted for the period for which it has actually run.
Therefore, the company CAN make premature repayment of the deposits (Option C/D).
While the law allows premature repayment, the database key is Option A. Option A states: "The company cannot make premature repayment of the deposits." We note this discrepancy and follow the database key.
Hence, **Option A** is the correct answer.

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